UK/GERMANY - Investors are investing cautiously in UK logistics as they wait for the market to fall further, according to SEB, the German fund management arm of the Swedish bank.
The comments came as the firm re-entered the UK market with the €63m acquisition of a Doncaster logistics property leased to retailer Next until 2023. The fact that Doncaster is the retailer's northern distribution hub "shows its strategic value as an excellent location", according to SEB spokeswoman Brigitte Schroll.
The Doncaster acquisition capitalises on a recent outward yield shift resulting from the pricing downturn over the past 12 months. Schroll said it presented an opportunity "to acquire a truly Grade-A warehouse distribution centre in a strategically located superb location and with a long, stable cash flow".
SEB's re-entry gives two cheers to the UK market from a fund manager focused on active management and close market scrutiny. SEB last sold off its UK portfolio at the end of 2004. Now it sees a property market recovery presenting acquisition opportunities in London office, despite the possibility of a further market correction. "For investors who pick their spots carefully, the current environment offers attractive opportunities across several markets," says Schroll.
"In many core markets such as the UK and across southern Europe, falling asset values will create opportunities for long-tem investors to acquire quality assets based on underwriting that reflects the fundamental income-producing characteristics of the asset class rather than on the assumptions of outsized capital growth that have defined the market in recent years."
Although European markets "have turned from sellers to buyers", the fund manager's deal pipeline prioritises Asian markets - notably, Malaysia, Singapore and China - with additional planned deals in the US, Central and Eastern Europe, and the UK, France and Spain. Specifically for logistics, it's currently looking at logistics premises built in "priority markets" - Germany, Benelux and the UK.