Logistics investments on course for recovery in the first half of 2024

BNP Paribas Real Estate publishes data on the logistics investment market for the second quarter of 2024

The logistics investment market continues to recover at the end of the first half of the year. With a transaction volume of around € 2.8 billion, the previous year's result was exceeded by almost 84 %. Although the current half-year result is still below the long-term average, the delta has shrunk to just -16%. The logistics investment market is therefore much more resilient than the other major asset classes, where the deviation from the long-term average still ranges from -26% (retail) to -75% (office). This is the result of the analysis by BNP Paribas Real Estate.

In the ranking of major types of use, the investment volume of the logistics segment is currently in second place, behind retail (€3.7 billion) and well ahead of the office segment (€2.2 billion).

"Following a gradual decline in the portfolio share over the past two years and only a few large transactions, this trend appears to have reversed. At € 1.25 billion, portfolio transactions now account for around 44% of the market share at the end of the first half of the year. The largest transaction of the year to date also contributed to this: the package acquisition of 12 properties by P3 Logistics Parks for more than €300 million," explains Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH.

Meanwhile, prime yields have stabilised since the beginning of the year. The net prime yields in the A-locations remain unchanged at 4.25 %. A sideways movement has also been recorded in Leipzig. A yield of 4.45 % can still be expected there.

Lots of volume outside the top locations

The top markets accounted for a comparatively small share of investment activity in the first half of the year. While they usually account for more than a quarter of the volume, they currently only account for around 19% or €528 million.

The distribution of the volume by size class clearly reflects the fact that the logistics investment market has moved from crisis mode to the recovery phase. With the return of planning certainty for financing costs, large-scale transactions are also possible again, which is impressively demonstrated by the 50% volume share of deals in the segment above the €100 million mark.

Another important signal is that a not inconsiderable proportion of these major transactions are attributable to international capital. Investors from Asia and North America in particular are currently on the lookout for opportunities.   

Prospects

The noticeable upturn in the logistics investment markets has accelerated up to the middle of 2024 and should continue to gain momentum in the coming months. Although long-term financing costs are still significantly higher than expected at the beginning of the year due to the unchanged inverse interest rate structure, the long-awaited and now completed first cut in the ECB's key interest rate should nevertheless have a psychological effect overall. It is now clear to all parties involved that values are currently bottoming out, at least in the prime segment. This is likely to be the starting signal for buyers looking for opportunities, as can be seen from the increased presence of investors from South East Asia and the USA in the first half of the year.

Meanwhile, the further economic development could represent a certain uncertainty factor. The letting markets have currently lost some of their momentum. Nevertheless, the key data for the German logistics market is still very positive from a landlord's perspective. For example, the very low vacancy rates across the board will not pose a structural problem in the foreseeable future, even if take-up of space is significantly reduced.

"Against this backdrop, it can be assumed that logistics investments will remain at the top of investors' favourites in the coming months. From today's perspective, it is unlikely that the investment volume will exceed the long-term average of € 7.1 billion by the end of the year. However, approaching the €7bn mark is within the realms of possibility," says Christopher Raabe.

Press contact:
Chantal Schaum - Tel: +49 (0)69-298 99-948, Mobile: +49 (0)174-903 85 77, chantal.schaum@bnpparibas.com
Viktoria Kühn - Tel: +49 (0)69-298 99-946, Mobile: +49 (0)173-968 60 86, viktoria.kuehn@bnpparibas.com

About BNP Paribas Real Estate

BNP Paribas Real Estate is a leading international property services provider that offers its clients comprehensive services in all phases of the property cycle: Transaction, Consulting, Valuation, Property Management, Investment Management and Property Development. With 5,000 employees, the company supports owners, tenants, investors and the public sector in their projects thanks to local expertise in 24 countries (own locations and alliance partners) in Europe, the Middle East and Asia. BNP Paribas Real Estate is part of the BNP Paribas Group, a leading global financial services provider.

As part of its commitment to sustainable cities, BNP Paribas Real Estate aims to play a leading role in the transition to creating more sustainable real estate that is low-carbon, resilient, inclusive and conducive to well-being. To this end, the company has developed a CSR policy with the following four objectives: to improve the economic performance and use of buildings in an ethical and responsible manner, to enable a low-carbon transition and reduce the environmental footprint, to ensure the development, engagement and well-being of employees and to be an active player in the property sector, building and promoting local initiatives and partnerships.

Further information: www.realestate.bnpparibas.com/

About BNP Paribas in Germany

BNP Paribas is a leading European bank with an international reach. It has around 183,000 employees in 63 countries, including almost 146,000 in Europe. The BNP Paribas Group has been active in Germany since 1947 and has successfully positioned itself on the market with 12 business units. Private clients, companies and institutional clients are served by around 6,000 employees nationwide in all relevant economic regions. The broad range of products and services offered by BNP Paribas corresponds to that of an innovative universal bank. www.bnpparibas.de