25% Increase Year-on-Year from H1 2013
The Nordics Experience the Highest Quarterly Total Since 2007
A total of €8.7 billion was invested into European industrial real estate during H1 2014, a 25% increase versus H1 2013, and the highest first half total since 2007. New data from global real estate advisor CBRE also shows that industrial property now makes up 10.3% of the real estate investment market, up from 9.5% in 2013.
In terms of location, the UK continues to capture the lion’s share of industrial investment, with the €3.46 billion invested in the sector this year (40% of total investment). Germany, France and the Netherlands also saw significant activity over this period.
The Nordics performed particularly well in H1 2014, with €878 million invested into the region, an almost 50% increase on H2 2013. The region began the year well with the highest quarterly total since 2007 in Q1 2014 and continues to attract large amounts of capital with high value sales, including a transaction of over €200 million in Sweden in the second quarter of 2014.
James Markby, Head of EMEA Industrial and Logistics Investment, CBRE, commented:
“The industrial sector’s continued growth in terms of both total investment and percentage of market share reaffirms its position as the sector which can generate attractive sustainable long term income returns, while also benefitting from capital growth along with the rest of the market. Many institutions are just beginning to allocate capital to the sector, and those that are already participating are looking for further increases.
“All areas of the market are functioning well, the transaction pipeline and size of deals is growing and the occupier led development cycle is starting to produce some very interesting dynamics again. Lack of available stock is now the challenge to satisfy investor and occupier demands.”
On the occupational side, industrial take-up rose across most countries in the first half of the year. Demand for warehouse space in core EMEA countries increased 42% year-on-year. Paris, Milan and Budapest saw the strongest improvements in leasing activity, followed closely by Dublin and Amsterdam.
Amaury Gariel, Head of EMEA Industrial and Logistics, CBRE, commented:
“One reason for the uptick in leasing transactions is that corporate funding is becoming more affordable and the economic outlook is much more positive. Therefore real estate decisions, which had previously been put on hold, or addressed through temporary solutions, are now back at the top of boardroom agendas.
“While demand is improving, there is still a mismatch between supply and demand. The availability of modern stock in well located areas is limited, which leaves occupiers with the option of taking space in secondary locations, or initiating a build-to-suit project. Therefore most newly completed space tends to be build-to-suit, although we are now seeing renewed appetite and some speculative development in the more strategic western European markets."