Logistics & Industrial Capital Markets 2024 Outlook Report

Asset pricing remained the key theme

Asset pricing was the key theme for 2023 as higher debt costs and rising bond yields continued to impact capitalisation rates. In most cases, buyers were generally unable to meet vendor book values, which have yet to record the level of yield softening required to trigger greater participation in light of where debt costs sit. Significant levels of rental growth have meant asset values are being maintained, and sharper initial yields were paid for assets where the rental uplift could be accessed in the short term.

Figure 10. Initial Yields vs Market Yields

6.5%

6.0%

5.5%

5.0%

4.5%

4.0%

3.5%

3.0%

2019

2020

2021

2022

2023

Initial Yield

Market Yield

Source: Cushman & Wakefield

Figure 11. 10-year Government Bond Yield vs. Prime National L&I Yield

12.0%

600

10.0%

500

8.0%

400

6.0%

300

4.0%

200

2.0%

100

0.0%

0

Dec-11

Dec-17

Dec-21

Dec-15

Dec-13

Dec-19

Dec-01

Dec-23

Dec-97

Dec-95

Dec-93

Dec-99

Dec-07

Dec-05

Dec-03

Dec-09

Spread (RHS)

10 year Govt. Bond Yield

National L&I Prime Yield

CAPITAL MARKETS 2024 OUTLOOK | 12

Source: MSCI, RBA, Cushman & Wakefield