Over £1.03 billion of capital was invested in UK industrial and logistics property in the first half of this year, more than the total volume transacted in 2012, according to new research from global property advisor CBRE.
Overseas and domestic buyers have been attracted to the asset type due to its defensive investment qualities, underpinned by robust occupier demand in core UK locations. Industrial and logistics property has consistently outperformed the IPD benchmark, and the improved debt market and reallocation of portfolios away from gilts and equities has led to further focus on the asset class.
Overseas purchasers accounted for 37% of all capital invested, followed closely by UK
institutions at 28%. Prior to the start of this year, buyers had predominantly
focused on properties which provided either short or long dated stock, but in
2013 a lack of supply has caused a dramatic rise in parties seeking mid-term
income (8-12 years unexpired terms).
Regionally, the strategically located South East and East Midlands markets have together
accounted for more than half of all purchases by value in H1 2013. This is due
to their excellent transport links and access to the wider UK market.
Richard Moffitt, Head of UK Industrial and Logistics, CBRE said:
“We have witnessed a resurgence in buyers eyeing quality UK industrial and
logistics property this year, driven by compelling evidence of the sector’s
performance relative to other asset classes. Occupier markets continue to thrive,
and the resulting lack of prime stock has led to a surge in design and build
activity in the best markets. The high levels of investment have led to an
inward movement in prime yields, now at 5.5% for the best stock, and we expect
this trend to continue as competition for prime assets grows.”