Making a comparison between them can be risky. the bitcoinone of the most volatile financial assets and logistics ships, a real estate asset that does not have large fluctuations in value. However, this past year was of particular importance to both, and not for the better.
This logistics industry Experienced a real investor rush from 2020 to this year. The outbreak of a global epidemic that restricts physical commerce, Its development electronic trade and with it all the necessary infrastructure. Shipping operators like ‘e-commerce’ giants like Amazon or Zara have also started demanding bigger and better ships.
Good data for these entities, entry of new mutual fundsin what was until now the ‘ugly duckling’ of the real estate industry. Great managers around the world, ships as a very safe asset and with it demanding less returns. The decrease in required return is directly proportional to the increase in price. The minimum rate required was 3% – 3.5%; this was a modest return on assets as secure as rentals or some office buildings in the center of major cities.
In an interview a few months ago, Juan Antonio Gutiérrez, CEO of wealth management company Mazabi, pointed out a fact few people see when it comes to logistics: “If you buy a place in Puerta del Sol in Madrid, you can pay a lot for it. expensive but you will always have a tenant; however If you make a mistake on a ship in the middle of nowhere, let’s see what to do with it”.
stock market falls
A supply crises and interest rates are they criminals This slowdown in growth and the exposure of some companies to unprecedented penalties in the stock market. While Bitcoin is down 75% from its all-time high, some real estate companies specializing in logistics aren’t far behind: Belgian VGP plunged over 65% in the stock market, and British Segro slumped close to 45%.
On the one hand, the supply crisis and the increase in construction costs ruined plans from some companies. As El Periódico de España announced last August, big funds like Patrizia were therefore forced to increase the purchase price by more than 9%.
At the same time, as building materials continue to rise, central banks around the world have adopted changes in monetary policy. The Federal Reserve rate hike and its effect on the European Central Bank triggered the prices of sovereign bonds. The coupon paid for Spain’s debt increased from 0.50 percent to 3 percent.
With 3 percent bonds, the real estate sector was in a difficult situation. chasing greater returns than before to arouse interest. Also, financing is now more expensive than it used to be. For the top listed companies, the cost of bonds is between 4% and 5%, which triggers profitability requirements.
Amazon and Merlin Paron
The crisis of US tech companies is another guarantee that the Spanish real estate market will pay the price. While giants such as Tesla, Meta (Facebook) or Amazon are dying in blood on the stock market, the results come to our country. Founded by Jeff Bezos in July of this year, halted the opening of at least four warehouses it had plannedespecially those located in secondary cities.
Ibex-35 socimi (real estate investment companies) Merlin Properties, which is one of those who know how to determine the suitability of logistics years ago as a result of some excess in the market in the last 24 months, stopped new construction. This company saw an opportunity in the past years and bought a lot of logistics land at affordable prices. They began to develop ships with good profitability. Now they have stopped the projects for some of their plots.
a guaranteed future
Despite the bad news since the middle of the year, logistics maintains its privileged position. David Martínez, CEO of logistics consulting firm ProEquity, explained in an interview with this medium: “We continue to move from offline to online commerce with more physical stores closing.” It is estimated that 15% of total purchasing volume is currently made online. will reach 25% in the next few years.
There is a general recession in real estate activities at the moment. Sellers froze their bids as interest rates changed the price at which investors were willing to buy. In the coming months, this gap will be adjusted as economic uncertainty is clarified. Until then, We’ll have to wait to see if major mutual funds will continue to rely on logistics..