The European Industrial and Logistics market experienced record levels of investment in Q2 2015 with the total volume reaching €6.1 billion. Investors are concentrating their capital on north western Europe, and particular favour lies with the UK market which accounted for 40 percent of the total volume. Germany, Sweden, Finland, the Netherlands and Spain also reported strong quarterly figures.
Continuing the trend seen throughout the year, occupiers of industrial properties were predominantly third party logistics (3PLs) or retailers. In turn, these occupiers were driven by high levels of private consumption and exports from the Eurozone. Across Europe, the market is strengthening, with the Netherlands experiencing record-high H1 take up volumes, as well as a strong development pipeline. Germany, France and the UK all reported robust growth rates, on the back of a strong Q1. In contrast the automotive sector is experiencing high levels of interest in the Central and Eastern European markets.
Rental growth remained modest in the quarter, and was mainly concentrated in the UK and Ireland. From a yield perspective, markets that have traditionally seen higher yields such as France, Italy and Central Europe saw a contraction over the quarter. The weighted average yield for EMEA has now dropped below 7 percent and in many markets previous lows have been reached or overtaken.
Amaury Gariel, Managing Director, EMEA Industrial & Logistics, commented: “Growing occupier demand and strong investor activity has meant that a rising development pipeline will now progress across Europe. Specifically, a number of Czech, Polish and Dutch hubs saw the creation of a strong pipeline in H1. However, in the UK and Ireland the development potential in key locations appears to be insufficient to cope with demand, particularly when taking into account the specific needs of occupiers inclusive of size, configuration and location. As the sector continues to go from strength to strength, with strong drivers for demand which remain high; we expect to see investor appetite sustain the high levels seen in this quarter.”
Anton Alyabyev, Director of Industrial & Logistics Department, СBRE in Russia, said: “From January – August 2015 investment into the Russian commercial real estate market amounted to USD 2 billion. Around USD 250 million, or 12 percent, was invested in the I&L segment. Herewith, one should point on the very high activity of retailers, who are buying warehouse for their own usage. Their purchases exceeded 400,000 sqm and USD 280 million.
This situation is driven by the fact that prices of industrial and logistics properties are at historical and cyclical lows. And it is an excellent time to invest in logistics for any business, which has long term plans to operate in Russia. It is even truer, given that prices and rents in Roubles will not decline in the future with very high probability. The only scenario, which assumes this opportunity, is the repetition of GDP trends in 2009. It looks improbable, given Bank of Russia flexibility in exchange rate management.”
