increase in initial yields is an obvious next step
In short: both headwinds and tailwinds are blowing in the logistics sector.
The logistics property shortage and limited opportunities for new construction are fuelling the logistics sector, while current macroeconomic conditions are creating headwinds.
Price corrections are ultimately to be expected.
The bond-yield spread is narrowing, creating upward pressure on initial yields in all property sectors.
Meanwhile, the prime BAR for logistics has also risen from 3.40% in May 2022 to the current 3.80%. Due to robust occupier demand, the logistics sector still remains an attractive real estate asset class. However, a further rise in initial yields is a likely prospect given the uncertainties prevailing in the market.
Sources Macrobond; Investing.com; Savills Data, Intelligence & Strategy
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