Arlington Securities, one of Europe's leading independent investment management and property services businesses, predicts that the European industrial market will deliver annualised returns of 8.8% over the next five years.
Arlington's European Logistics Snapshot, published reports that the global logistics industry grew by more than 10% in 2005, fuelled by Asian economic growth and the demand for outsourcing.
Arlington's research also predicts that real estate owners will focus more closely on trade routes and operational networks, matching their property investment portfolios to the requirements of their core customers. Locations set to benefit from this include the northern ports of Hamburg, Antwerp, Rotterdam and Le Havre, and Naples, Barcelona and Marseille in southern Europe. The fast developing ports of Trieste in Slovenia and Gdansk/Gdynia in Poland will also attract new occupiers as these locations increase their cargo capacity.
Andrew Smith, Arlington's Head of Investment Strategy, commented: "Despite limited rental growth, logistics property offers some interesting opportunities for investors as the industry is growing at a fast pace and needs efficient, modern accommodation. Logistics operators, and particularly retail-related ones, are increasingly looking to develop international or even global real estate networks. Investment performance prospects will be more a regional rather than national story, as a number of market hotspots straddle international borders. The most successful investors will target these hotspots, looking to benefit from expansion in the global contracts logistics industry and planned infrastructure investment."
Snapshot highlights include:
- Investors are now paying the same price for real estate in Prague as they are for similar assets in the Ile de France.
- Lack of development activity since 2003 has caused a shortage of modern stock in key locations.
- In the short term, current pricing and strong investor demand will generate a healthy uplift in capital values across the eurozone, particularly in Spain, Belgium and Germany.
- Portugal and Austria are amongst the weakest performers.