‘Investors have all been standing around the edge of the pool, dipping in their toes, but no-one wants to dive in,’ said Pierre-David Baylac, head of logistics Europe for Generali Real Estate, speaking at this year’s Expo Real.
Baylac was analysing the outlook for logistics capital markets in what he called ‘a year of stabilisation’.
‘I think we have touched the inflection plateau, and it looks more like a U curve than a V curve. The beauty in logistics is that we are also seeing transactions, so valuations are based not just on sentiment, but also on deals,’ he said.
Baylac said that he had noticed core deals coming back, in addition to core-plus, giving the markets ‘a sense of where core is landing’.
He said that he thought appreciation would be round the corner, with yields also tightening. ‘Rental growth has been massive, and while values are unlikely to rise in the short term, the medium term looks positive,’ he said. ‘There is a real scarcity of land for logistics and the scarcity of product means more demand for sustainable assets.’
Generali Real Estate has remained active throughout the past couple of years of market inflection. Baylac said that development had remained a strong theme, with schemes such as Park Kraków South proving a success, even managing to pre-let units prior to permits being secured.
Baylac also reported that the logistics team had signed a joint venture with French energy giant EDF recently, following prior JVs between Generali and EDF to acquire office real estate.
Another cheering sign was the debt outlook, he added. ‘We can still get good financing on logistics,’ he said. ‘We are very happy with the conditions we have secured, reflecting the fact that lenders are also very keen on logistics. There is less willingness to lend against asset classes like offices on account of the uncertain outlook, but there are good refinancing prospects this year and in the future for logistics.’
