Catella : European logistics markets 2022 / 2023

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Munich, November 3, 2022 – The logistics asset class, which has outperformed in recent years, is also feeling the effects of volatile capital market movements. Risk premiums in financing, more taxonomy-compliant ESG issues in project development, but also an increasing eastward look at new projects along the eastern border in Europe can be observed.

The changed financing conditions for project developments in this segment, which have been measurable over the past 9 months, and the fundamental risk adjustment to the political-economic situation will continue to put pressure on multipliers and returns. The overall weakening of the economic situation in Europe will also have an impact. Nevertheless, the demand for logistics real estate continues to be matched by a very low supply.

Yields and rents have changed in the last 6 months. Our forecast from spring 2022 “We will find a new yield landscape in parts of Europe” has come true. Currently we would like to give you an overview of Q3 2022 and the expectations for the logistics markets in Europe – as always in a comparative overview with a total of 115 regions.

– European top rents currently average €5.84/m², ranging from €3.75/m² in Zaragoza to €16.40/m² in London. Since our last market survey in March 2022, prime rents for logistics properties have risen by an average of over 1.5% in all 115 markets surveyed.

– The increase was particularly significant in Rotterdam-Maasvlakte (+44%), Antwerp (+17%) and Brussels (+10.20%).

– Due to the new risk assessment on the European commercial real estate markets, the yield compression of the last few years has come to an end. However, it has changed slightly. European prime yields now average 4.85%, which is just 3 basis points higher than when analyzed 6 months ago.

– The lowest net initial yields, which indicate the most expensive logistics locations in Europe, can be found in German A locations (3.10% in Berlin & Munich, Paris (3.30%) and London (3.40%). No location in Europe has fallen below the 3% mark and will continue to do so for the foreseeable future.

– The persistently strong demand for logistics real estate is also reflected in the transaction volume within the individual countries. For example, a logistics transaction volume of €8.5 billion was recorded in Germany and €3.5 billion in Great Britain. In total, in Q3 2022, an investment volume of almost EUR 21 billion was made across the markets examined. Our forecast for 2022 is a transaction volume of EUR 59 billion.

Overall, the market situation in Europe continues to be impressive. Nevertheless, the logistics real estate market will be confronted with reshoring, nearshoring and the effects of the war in Ukraine in the coming months. The growth continues with increased risk provisioning by investors.

Kind regards,

Prof. Dr. Thomas Beyerle


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