EUR13.1bn of European logistics investment volume was recorded in 2013. This 25% increase was the largest since mid-2010 and sets volumes at a post 2007 record. The logistics sector also recorded faster growth than the 17% overall European property investment volume growth during the year. Two megadeals (one between Prologis and Norges, and the one signed between Segro and PSP) boosted the market activity in H1. During H2 we saw a greater activity in medium sized deals. As usual, the UK and Germany represented more than 50% of the invested volume in Europe. Volumes were also high in Nordics, lead by strong activity in Sweden.
Private property vehicles continue to dominate as the largest share of investor type on the buy side. The top 5 investors represent more than 20% of the total invested volume recorded in 2013. This ranking confirms the come-back of traditional players on the buy side and welcomes as well new comers such as the sovereign wealth funds involved in the two megadeals of the year.
Strong competition between investors put prime yields under pressure in the UK and in a few markets on the continent. But, elsewhere yields remained stable. The European logistics market continues to offer a wide range of prime yields: from 6% or below in the UK to between 7 and 8% in the majority of the other markets. However, there are still some markets with yields standing above 9%, such as in Budapest or the Baltic. We expect yield compression to continue in markets where they are still high. But, in the core markets (UK and France mainly) we project yields to show a modest widening.
Despite this strong performance on the investment side in 2013, we expect even more for 2014, as the economic context will be more favourable for the logistics sector in Europe. 1.4% increase of GDP annual growth anticipated from now to 2017. Industrial production, retail sales and consumer spending are also forecasted to come back to positive territory and should support a stronger occupiers’ demand going forward. However the situation remains fragile as the recent figures of imports-exports in the Euro area have revealed. They have been more dynamic in the full year 2013 despite having posted small declines in Q4.
Source : DTZ (Groupe UGL)