Large price corrections making European logistics attractive again

The large price corrections since the middle of 2022 have made the European logistics sector looks attractive again, according to a new study by DWS.

The manager said it has shied away from the market in recent years as it viewed logistics assets as relatively expensive compared to other sectors, such as residential. Now, however, prime values have dropped by about 15 percent in the manager’s estimation, while average-quality stock is down in value by between 20 percent and 25 percent. DWS said this has created attractive entry points for investors, who can now benefit from yields expanding by up to 175 basis points in some locations.

In the period between 2020 and 2021, said Ruben Bos, head of real estate investment strategy for Europe DWS, the sector displayed robust rental growth, but assets had to be underwritten with 4 percent to 5 percent rental growth levels for an average five-year period to make IRR “stack up.”

“As a result we invested a lot mor