Year: 2026
Type: article
Abstract: Purpose Logistics real estate is a major real estate sub-sector in Australia and internationally. This has seen industrial real estate being refocused in recent years, as well as with the increased global focus on on-line retailing seeing increased demand for logistics real estate. Institutional investors such as pension funds have been attracted to this key real estate sub-sector as part of their substantial commercial real estate portfolios. This paper assesses the importance, significance, risk-adjusted performance and portfolio diversification benefits of logistics real estate in Australia, and the added-value role of Australian logistics real estate in an Australian mixed-asset portfolio. The opportunities, drivers and challenges for institutional investors in considering logistics real estate are highlighted. The strategic implications of investing in Australian logistics real estate for institutional investors are also highlighted, with effective logistics real estate investment pathways identified. Design/methodology/approach Using total returns, the risk-adjusted performance and portfolio diversification benefits of Australian logistics real estate over 2003–2023 are assessed. An asset allocation diagram is used to assess the role of Australian logistics real estate in an Australian mixed-asset portfolio. To assess the robustness of these results over the short-term, medium-term and long-term, sub-period analyses are also conducted. Findings The Australian logistics real estate sector was shown to have important investment features concerning risk-adjusted returns and portfolio diversification benefits, highlighting its added-value benefits in a portfolio for institutional investors. This strong performance by logistics real estate was seen in the long-term, medium-term and short-term; particularly compared to the other major real estate sectors and other major asset classes. Stronger risk-adjusted performance and diversification benefits are seen via direct logistics real estate exposure than listed logistics real estate exposure. In particular, this paper highlights logistics real estate as providing the essential infrastructure needed for the efficient operation and delivery of the logistics sector, both in Australia and internationally. Practical implications This paper has highlighted the performance, portfolio diversification and added-value benefits of Australian logistics real estate in an institutional investor's portfolio. Clear pathways are identified for the inclusion of Australian logistics real estate in a portfolio. Strategies are identified that see institutional investors having effective real estate investment vehicles for including Australian logistics real estate in their portfolio, with both listed real estate and non-listed real estate channels as effective for delivering Australian logistics real estate exposure. The inclusion of Australian logistics real estate in the portfolio for institutional investors adds to their exposure already achieved via office and retail real estate in achieving high-quality real estate exposure in Australia. The practical implications concerning the growth in e-commerce and the impact on logistics real estate in Australia going forward are highlighted. Originality/value Logistics real estate is an important real estate sector for institutional investors. This paper is the first to assess the significance and importance of Australian logistics real estate, its risk-adjusted performance, portfolio diversification benefits and added-value role in an Australian mixed-asset portfolio. The strategic implications for investing in Australian logistics real estate for institutional investors are also highlighted.
Source: Property Management
Authors: Graeme Newell, Jufri Marzuki
Institution: Western Sydney University
Language: English
Subfield: Architecture
Field: Engineering
Domain: Physical Sciences
Open Access status: hybrid
OpenAlex ID: W7204897980