The logistics sector saw the largest increase in transaction volumes relative to other real estate segments in Europe during 2013.
The logistics sector saw the largest increase in transaction volumes relative to other real estate segments in Europe during 2013.
Last year, logistics property investment volumes increased by about 50% to over €14 bn, the highest figure 'by some distance' since the €20 bn recorded in 2007, according to Richard Holberton, director of EMEA research at CBRE.
'January is a good time to reflect on what people said they would do during 2013,' Holberton said in the opening presentation at PropertyEU's European Logistics Briefing, hosted by CBRE in London this week. 'The message in our Investment Intentions survey carried out in 2012 was loud and clear: investors said they were going to buy more logistics assets in 2013 and they kept this New Year's resolution in spades.' (See slide 1)
Data produced by CBRE indicate that the office sector was the most popular segment for investment in 2013, but the overall increase in popularity was much lower than for logistics. (See slide 2)
Light industrial, often seen as the less handsome younger brother of logistics, saw its popularity rise only marginally.
While logistics volumes rose sharply, the increase in investment was not uniform across Europe by any means, Holberton said. 'There were pretty big increases in perhaps unlikely places. Southern Europe was up 200% - admittedly from a very low base in 2012.'
CBRE recorded large increases across a range of markets: Spain, Italy, Central and Eastern Europe and the Benelux. The UK saw a 40% increase, while activity rose 25% in both France and Germany. In contrast the increase for all-property was less than 25%. (See slide 3)
Holberton: 'There is clearly a great deal of investment momentum in the sector at the moment and there are a lot of reasons for this. First of all the spread between German bond yields and industrial property yields stood at 550 basis points in December 2013. This provides a good rationale for the sector as a capital preservation/income play and has resulted in big movements in pricing and significant yield shift in certain markets.'
Yield impact is the predominant driver of pricing. London and Dublin, followed by Manchester and Paris have seen the largest yield shifts. Across a broad spectrum of established logistics locations prime yields have come in by at least 25 bps over the past year, leaving them in 6.5%-6.7% yield territory.' (See slide 4)
The full presentation is available at Latest Briefings