According to Jones Lang LaSalle, European industrial investment volumes rebounded sharply in the third quarter, totaling €2.3 billion, up 13% year on year. This comes after a sluggish second quarter, when volumes fell by 14%. As a result, the year-to-date total of €6.8 billion is 15% higher than the same period the previous year, indicating continued strong investor demand for logistics and industrial assets. real estate companies in qatar
"We're witnessing an increase in equity targeting new investment possibilities in the industry, particularly due to strong income yields," says Chris Staveley, Director of Jones Lang LaSalle EMEA Capital Markets.
"The current transaction volumes are actually underestimating the market's appetite. However, continued tight competition in the top-end category, along with rising global financial tensions, is preventing substantially better results."
The major European markets of the United Kingdom, Germany, and France drove investment activity. All three witnessed significant growth during the quarter, accounting for 67 percent of total volume in Q3. As more merchandise became available, activity in the UK, Europe's largest market, increased by 66%. However, investment volumes in the first three quarters of 2011, totaling €2.1 billion, were unchanged year over year, owing to a mix of limited core product in the first half of the year and transaction completions postponed until the third quarter.
Industrial investment volumes in CEE and Russia have increased by 125 percent year to far compared to the same period last year, indicating continued strong investor interest in a wider range of markets across the region. Nonetheless, overall volumes are limited, because to a lack of possibilities and a diminished willingness to take risks.
During the quarter, cross-border volumes remained stable, but domestic investors were slightly more active, with a 52 percent share in Q3 as they began to use their home advantage. Nonetheless, foreign and US investors have traded assets worth €2.0 billion so far this year, which is five times more than the same period last year. As a result, cross-border investments are still driving market activity, accounting for 60% of total volume thus far this year.
"With increased investor caution and limited core industrial product across Europe," Chris Staveley tells the World Property Channel, "we now expect full year 2011 transaction volumes to reach between €9.0 and €9.5 billion, only modestly ahead of previous year."
For the second quarter in a row, prime industrial yields have remained constant at 7.40 percent. As a result, annual compression in the third quarter slowed to 20bps. Over the quarter, yield compression was seen in several Dutch markets (down 10bps) and premium London assets (down -25bps), while rates in Dublin went out 50bps due to a lack of investor demand.
Due to a lack of continuous rental growth and yield compression, prime capital value growth slowed in Q3, falling to 0.6 percent from 1.1 percent in Q2, and year-over-year growth to 3.6 percent from 4.1 percent in Q2. Berlin (4.4 percent), Düsseldorf (3.8 percent), London (4.2 percent), Munich (5.0 percent), and Rotterdam (3.2 percent) saw the most capital value growth in the quarter, while Barcelona (-3.7 percent) and Dublin continued to decrease (-8.7 percent ).
"In the fourth quarter and early 2012, we believe there is limited possibility for further yield compression. As a result, pricing is anticipated to stay unchanged, with capital growth predominantly driven by rental increases "Jones Lang LaSalle's Alexandra Tornow, Head of EMEA Logistics and Industrial Research, remarked. "Only a few places, especially traditional core industrial Western European markets such as London, Paris, the key Dutch and German markets, and the Nordic markets, are expected to buck this trend, but with modest overall growth," she added.