The UK was the driving force behind the strong performance of the European logistics market in 2013, according to the IPD Pan-Europe Annual Logistics Index.

The UK was the driving force behind the strong performance of the European logistics market in 2013, according to the IPD Pan-Europe Annual Logistics Index.

With a return of 16.4%, the strong UK performance also masks significantly weaker performance across other European markets. The European average of 8.7% was based on an income return of 7.1% and capital growth of 1.5%, but this was driven by 8.8% appreciation in the UK.

Capital growth was negative in 11 other European markets, particularly in Spain and Hungary where values fell by 4.0%. The worst performing European market was Portugal, with a combination of low income returns and value declines leading to a 0.0% total return for the year as a whole.

Although 2013 was a strong year for European logistics, the differences across Europe and the spike in appreciation in UK returns point to the potential volatility of the sector.

Peter Hobbs, head of research at IPD, said: 'While logistics benefits from a high income yield, it has tended to benefit, and suffer, from marked variations in capital flows that pushed values in the run-up to the financial crisis, and led to a significant correction through the downturn. This capital market volatility means that logistics has, perhaps surprisingly for many, been one of the most volatile sectors over the past decade.'

The IPD Pan-Europe Annual Logistics Index covers 19 countries and is comprised of 985 properties valued at €16.9 bn. The Index defines logistics properties as distribution warehouses built in 1998 or later and that are over 10,000 m2).