The Asia Pacific logistics real estate market has moved beyond the extraordinary conditions of the pandemic era. From 2020 to 2022, the sector enjoyed what we characterize as a “beta wave:” rapidly rising ecommerce adoption and rapidly declining and historically low interest rates. These two forces simultaneously compressed cap rates and drove record absorption. That period has ended. During the past 18 to 24 months, logistics occupier demand has normalized, vacancies have risen from cyclical troughs, and investment volumes and asset prices have recalibrated from peak levels.
This adjustment is best understood as a cyclical reset within a maturing asset class rather than a secular decline. For institutional investors, this normalization is healthy. It has reduced the exuberance observed at the peak of the cycle, restored more rational underwriting assumptions and created an attractive entry point that should provide more predictable risk-adjusted returns.
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