Germany, which has come top of the Logistics Market Attractiveness (LMA) Index with 70.2 points, is currently a strategic market for investors looking to capitalise on growing cross-border e-commerce trends, according to Savills’ latest European Omnichannel report. So much so that prime yields have seen a declining trend – currently sitting between 4.1 – 4.4%.
France and the UK come a close second in the ranking (68.3 and 68.1 points respectively) with high levels of investor interest in the logistics sector. The UK, which boasts the most mature e-commerce market, shows the lowest spread between internet and online retail penetration across Europe, demonstrating that internet usage has fully given way to online purchases.
Savills says this trend shows no signs of slowing and e-commerce is expected to increase by 6.7% pa over the next five years, according to Statistica, and, as a result, is already translating into growing demand from logistics investors.
Marcus de Minckwitz, Director, Regional Investment Advisory EMEA, at Savills, explains:
“Looking at the spread of the Savills LMA Index across Europe, it is clear that Western Europe is leading the charge when it comes to ecommerce penetration and subsequent investment into the logistics market although its effects can be felt across the continent. Despite a challenging socio-economic outlook, retail sales across Europe are expected to rise an average 2.1% per annum until 2020 and, with more of this being spent online, we anticipate demand from both occupiers and investors for the logistics sector to increase further during this time.”
Lydia Brissy, Director, European Commercial Research, Savills, added:
“Western Europe, which has always been ahead in the property cycle, acts as a useful case study for investors looking for value-add opportunities across the continent. As the logistics sector in countries such as Germany, France, the UK and the Netherlands continue to boom, we can expect to see Central and Eastern Europe catch up in not too long.”
The Netherlands and Ireland rank fourth and fifth respectively in the index with markets expected to mature as the relationship between the retail and logistics sector continues to flourish. Tomorrow we examine in detail Savills’ top five markets for logistics investment.