CONTRIBUTORS
Indraneel Karlekar, Ph.D
Global Head of Research and Strategy, Clarion Partners
Pedro Nino
Head of Industrial Research and Strategy
Clarion Partners
Bruno Berretta
Head of Research, European Markets
Clarion Partners
Preview
In this paper, we look at how the industrial sector has become a global favorite amongst institutional investors as large structural shifts already underway, accelerated during the pandemic. The increasing adoption of e-commerce, driven by demographic shifts, technology, and shifting global trade dynamics, has remained a steadfast driver of industrial demand and led to a higher share of institutional investor allocations to the sector.
The outlook remains bright
Heading into 2024, the United States and European Union (EU) economies have remained resilient despite tighter monetary conditions and heightened geopolitical uncertainties. As the prospects for further rate hikes and recession risks fade, we expect asset values to trough and debt capital costs to improve thereby, providing the industrial sector tailwinds as it enters a new cycle.
Powerful and durable structural themes give us confidence in the industrial sector. Notwithstanding some short-term supply issues in the United States and deeper market losses in the EU, we expect the continued strength in demand to lead the industrial sector to deliver the best rent growth over the forecast period among the big 'four' property types (industrial, multifamily, retail and office).
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. Please note that an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results.
Equity securities are subject to price fluctuation and possible loss of principal.
Fixed-income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed income securities falls.
International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.
Commodities and currencies contain heightened risk that include market, political, regulatory, and natural conditions and may not be suitable for all investors.
US Treasuries are direct debt obligations issued and backed by the “full faith and credit” of the US government. The US government guarantees the principal and interest payments on US Treasuries when the securities are held to maturity. Unlike US Treasuries, debt securities issued by the federal agencies and instrumentalities and related investments may or may not be backed by the full faith and credit of the US government. Even when the US government guarantees principal and interest payments on securities, this guarantee does not apply to losses resulting from declines in the market value of these securities.