Mideast SWFs invest in European industrial market
Dubai, January 30, 2014
The European industrial and logistics real estate market saw more investment from sovreign wealth funds (SWF) in the Middle East, said a report.
It has attracted more than 14 billion euros ($19.1 billion) of investment in 2013, the highest single year since 2007, up 50 per cent on the previous year, according to the latest research from global property advisor CBRE.
The sector also attracted new sources of capital, leading to increased investment activity by specialist investor-developers, third party equity capital from sovereign wealth funds in Asia and overseas pension funds from North America.
James Markby, head of European Industrial and Logistics Investment, said: “The shift in investment appetite towards the industrial and logistics sector was a key trend of 2013. A good deal of the growth occurred through partnership arrangements between specialist investor-developers and third party equity capital from sovereign wealth funds and overseas pension funds.
“Growing private equity interest is also evident and expected to continue. There are some similarities here with trends in the US, where investment levels also rose last year and cap rates are on a downward path – one of the reasons for growing US interest in the European market. The trend is strong and set to continue in 2014.
“With economic recovery gaining momentum and industrial production expected to improve further, occupational demand levels will see some cyclical growth to add further support to the investment case, and pricing in the better locations will continue to respond.”
This scale of investment activity has produced significant and widespread pricing movements in prime yields for the best assets, he said.
Nearly half the industrial locations covered in CBRE’s quarterly yield survey moved lower in the final quarter of last year, while during the year, prime yields in some of the core European markets narrowed by 50 basis points or more, with London and Dublin among the largest movers. - TradeArabia News Service