– €6.1Billion Invested With An Emphasis on North Western Europe –
– Occupier Demand Retains Momentum With 3PLs and Retailers Most Active –
London – Kyiv, 3 September 2015 – 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% 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% and in many markets previous lows have been reached or overtaken.
Yaroslav Gorbushko, Head of Department Industrial and Logistics Brokerage, said:
“Unlike the markets of the Central and Western Europe, investment into Ukrainian industrial real estate market remained at the 10-year low. Due to low rental rates (the base industrial rents for A class warehouse space are recorded at $4.5/sq m/month), developers prefer not to invest in warehouse schemes, allocating funds towards more profitable segments (residential, office, retail). No new warehouse schemes were delivered onto the speculative market year-to-date. Notably, during eight months of 2015 the volume of new completions for owner-occupation amounted to 22,000 sq m within phase II of FM Logistics (14,000 sq m) and Imperial Tobacco (8,000 sq m). Additionally, no notable acquisitions of industrial properties took place during the same period. According to potential investors, the prices still don’t correspond to market realities.”
