European industrial investment activity rose by 80% in the first half of 2010 from a market bottom 12 months ago, property adviser Jones Lang LaSalle said at EXPO REAL in Munich. Despite this significant increase, volumes are still below pre-credit crisis levels with recovery in the industrial investment market still fragile and uneven, according to JLL’s European Industrial Markets Autumn 2010 report.
European industrial investment activity rose by 80% in the first half of 2010 from a market bottom 12 months ago, property adviser Jones Lang LaSalle said at EXPO REAL in Munich. Despite this significant increase, volumes are still below pre-credit crisis levels with recovery in the industrial investment market still fragile and uneven, according to JLL’s European Industrial Markets Autumn 2010 report.
European industrial investment volumes came in at EUR 4.3 bn in the first half of 2010, with transaction activity 12% higher than the previous half year and up 77% on the same period in 2009. Compared to volumes 12 months ago, the strongest growth was recorded in Sweden, Germany and Russia and Norway. Belgium, Finland and the Netherlands were the only markets to see further weakening in investment volumes year-on-year.
The JLL report shows that the marked increase in investor appetite over the last 12 months for a relatively small pool of available top-end assets has driven down prime industrial yields across Europe. JLL’s net initial European prime distribution warehousing yield has, since reaching its trough in Q2 2009, compressed 50bps and stood at 7.80% in the second half of 2010, 20bps above the 10-year average.
While yield compression in the second half of 2009 was driven by a strong rebound in the UK markets, a widespread inward yield shift across Continental Europe was seen in the first half of 2010. The overall European weighted net initial yield stabilised in Q2 and no significant further compression is anticipated in the second half of 2010, JLL said.
Total European warehousing take-up amounted to 5.8 million m2 in the first half of 2010, reflecting an 8% increase on the previous half year and 22% on the same period last year. Take-up was boosted by strong rebounds in the UK and the CEE. Take-up has grown moderately in Germany and Italy year-on-year, but the overall recovery remains patchy and occupier activity continued to weaken in Belgium, France, the Netherlands and Spain.
