Realogis-RLI Group predicts massive capital reallocation of institutional capital in favour of logistics properties
German industrial, warehouse and logistics property specialist Realogis-RLI Group is expecting institutional real estate investors to massively reallocate capital to logistics properties, post coronavirus.
In the USA, 30 per cent of institutional capital is currently invested in the “industrial sector”, and this figure has been rising for decades. The majority is attributable to logistics. According to the Realogis-RLI Group, logistics properties currently account for almost 15 per cent of allocated capital in Germany, compared with 7 per cent over ten years ago.
“In the next ten years, the high-end logistics sector in Germany will see capital allocations of between 30 per cent and 50 per cent among institutional investors,” says Umut Ertan, founder and partner in the Realogis-RLI Group, confidently. “Residential and logistics are the most crisis-resistant asset classes within the property sector as a whole. Looking at commercial property alone, logistics is the most crisis-resistant asset class.”
The Realogis-RLI Group engages in a continuous dialogue with almost 100 indirect institutional investors, family offices, sovereign wealth funds and direct investors. They all confirm their intention to increase the proportion of their capital allocated to logistics.
“Many are thinking about scaling back their investments in offices and business centres, large-scale specialist retail spaces, shopping centres and hotels or even eliminating them altogether,” adds Umut Ertan. “Over the next 12 to 18 months, logistics will see an unprecedented run in terms of capital reallocation.”