Real Estate House View 2021: Logistics Outlook

The explosion of e-commerce. Governments responded to COVID-19 by urging people to stay at home and restricting movement, which disrupted traditional retail and supply chains. The logistics sector stands to benefit from both of these situations: e-commerce has escalated, benefiting the logistics sector over retail, while retailers evaluated the resilience of their supply chains and capacity to serve their customers. This trend was quickly observed and bought into by investors: it’s the acceleration of a longer-term thematic. As we enter 2021 with a lot of capital chasing a small sector, being selective is key. Attractive logistics assets include those strategically placed near customers and in areas which are highly populated with high spending. For a defensive long-term play, investors can mitigate valuation risk by focusing on areas with scarce land which means a higher underlying land value for assets compared to the alternate traditional sectors.