According to Savills’ latest European Logistics Outlook, industrial investment volumes, which totalled €5.1 billion, declined by 49 percent q-o-q and by 73 percent compared to Q1 2022, which was notably a record high. Compared to the same period last year on a country-by-country, the Czech Republic (-3 percent), Ireland (-29 percent) and Portugal (-45 percent) recorded the smallest declines in investment volumes year-on-year.
Only Poland and Romania witnessed an uplift in investment. Poland saw a 110 percent increase year on year, mainly driven by the purchase of a 185,000 sqm industrial warehouse by P3 Logistics Parks from Panattoni while Romania recorded no investment transactions in Q1 2022. Investment volumes dropped most in Hungary, where no deals were completed in the quarter, Norway (-92 percent), Belgium (-88 percent) and France (-84 percent).
Fraser Watson, Investment Advisory Director at Savills CZ&SK, says: “The Czech industrial market has shown a high degree of resilience to the wider macroeconomic forces at play across the continent. Of course, no one factor is behind this; a combination of the country’s ideal geographic location, restricted new supply pipeline, tight ownership control of existing stock and the ongoing very low vacancy rate all contribute to some degree to the continuation in demand from investors for Czech industrial property.”
Industrial transactions in the Czech totalled €125.5 million in Q1 2023 (30 percent of the quarter’s total transaction volume). Based on transaction count, industrial assets were the most traded sector with four deals concluded. Market yields of prime logistics properties remain unchanged as of Q1 2023, at 5.00 percent.
Three of the four transactions concluded in Czech had domestic capital behind them, with the fourth one being a Slovak entity. This is a continuation of what has been witnessed over previous years, with domestic and regional investors being the dominant source of capital. Goodman, LondonMetric and Panattoni were the most active vendors in the European market this quarter and the biggest buyers by volume were BentalGreenOak, Blackstone and AGC Equity.
Marcus de Minckwitz, Head of EMEA industrial & logistics, adds: “A primary factor in this deceleration of investment volumes in Europe has been tighter monetary policy, as central banks continued to hike interest rates resulting in higher finance costs negatively impacting investor sentiment. Looking ahead, as the market stabilises and uncertainty decreases, we expect to see a pick-up in transactions as the year progresses.”
