European Industrial Investments Soar

Direct investment for European industrial and logistics property reached €6.0 billion for the first half of the year, a 57 percent increase from last year and the highest investment volume for a half since 2007.

 

Direct investment for the first six months was 54 percent higher than the five-year first-half average, according to the latest data from Jones Lang LaSalle.

The firm expects direct investment volumes for industrial and logistics property to pass €10 billion in 2013, recording the third-strongest full-year result. 

"Over the last 18 months, we have seen sustained growth in investor appetite for logistics and industrial investment opportunities thanks to healthy income returns," Tom Waite, director European capital markets in JLL, said in the report. "We are now seeing this interest starting to translate into meaningful increased transaction activity and investment volume." 

Investment volumes reached €2.8 billion in the second quarter, an increase of 17 percent from last year. Excluding the €1.2 billion portfolio deal of Prologis/Norges Bank in the first quarter, direct investment increased 40 percent over the quarter. 

The U.K., France and Germany, Europe"s major markets, reported investment growth of 21 percent in the first half compared to last year. However, investment was flat during the second quarter as investors are widening their definition of "core" and investing in other countries, JLL said. 

The logistics and industrial sector suffers from a lack of prime property, the firm said.  

"This has upheld pressure on pricing and in the second quarter led to the first European yield compression after three consecutive quarters of no change," Alexandra Tornow, associate director EMEA logistics & industrial research in JLL, said. "However, there is now gradually more investible stock coming onto the market as continued healthy occupier demand is leading to new development." 

Prime logistics yields have compressed in markets including Birmingham, London and Moscow, as well as several markets in France and Germany.   

During the first six months, capital sourced outside of Europe grew to more than €1 billion, up 37 percent from last year and was 21 percent higher than the five-year first-half average. 

The logistics and industrial investment volume represents 10 percent of overall commercial property investment for the first half, up from an eight percent five-year average. Overall, European commercial property investment increased by 13 percent during the second quarter compared to last year, with deals reaching a five-year high.