Real Estate

<p>&nbsp;Key points in our recent industrial &amp; logistics report on the emerging sub-sectors include:</p><p><strong>Urban and last mile logistics&nbsp;</strong>&ndash; We expect rental and land-value growth to be strongest in urban and city fringe locations due to an increasing scarcity of land and strong occupier demand for last-mile facilities close to end consumers. We estimate that the rental premium of urban industrial rents versus those of standard prime assets was 45% in 2020. Accessing assets in urban settings which possess the ESG characteristics that investors and occupiers are demanding is challenging. As such, a &lsquo;build it rather than buy it&rsquo; may be required, which presents its own difficulties.</p><p><strong>Light industrial estates&nbsp;</strong>&ndash; Typically less than 10,000 sq. m in size and often located within urban boundaries where population growth and urbanisation are constraining supply. Having many small tenants on a multi-let estate requires greater asset management but it also increases the chances of securing tenants and reducing substantial void periods. There is potential in existing assets and redevelopment opportunities, despite the greater complexity and downside risks involved. Areas with demand-supply imbalances provide scope for rental growth, but location and stock selection are important.</p><p><strong>Cold storage&nbsp;</strong>&ndash; This sub-sector has the potential to become a strong long-term opportunity underpinned by solid fundamentals and steady inter-cyclical demand. In addition to traditional grocery retailers ramping up their online activities, new online grocery platforms have emerged while the public health emergency has led to a global surge in demand for medical supplies that require refrigeration. The European cold chain logistics market was worth US$75 billion in 2019 and we estimate that its value will reach US$113 billion by 2025, indicating growth of more than 8% per annum. The most attractive facilities are located close to large European metropolitan areas.</p><p>&nbsp;</p>