There is plenty more room for the expansion of the European logistics market, says Ben Bannatyne, president of Prologis Europe.
Speaking at the release of the company’s global and European half-year results to June, Bannatyne said low levels of supply, supply chain reconfiguration and the rise of e-commerce would all continue to drive returns.
Half-year revenues for the logistics giant, which has more than $27bn (£20bn) in real estate assets globally, were up by 15.5% to $1.4bn. Global earnings before tax rose by 13.9% to $1.1bn on the previous six months.
Bannatyne said the situation in Europe was extremely positive, despite a number of uncertainties.
“It’s inevitable there will be some correction or slowdown, but there is nothing on the immediate horizon that would suggest that we are in for that soon,” he said.
“In terms of growth we are seeing it in every country where we operate. It’s difficult to say when it will slow down. As more and more e-commerce happens, we would expect it tail off, but we are not seeing it all.”
In Europe, during the first half of 2017, the company signed leases and renewals on 25.8m sq ft and started construction on 13 buildings totalling 4.2m sq ft.
Prologis bought 341 acres of development land in Europe as well as a portfolio of five fully-let buildings, totalling 828,821 sq ft, in Sweden in the first half of the year. During the same period, the company disposed of 4.3m sq ft in buildings across Europe, along with 79 acres of land.
Bannatyne said the European countries set for the most growth were Poland and France.
He added that large portfolios deals had now run their course, and that players would now be consolidating what they have bought. He said Prologis would continue to develop and increase its depth in the markets in which it operated.
This is not a barrier to future investment, he said.
“From an investor perspective, there is a huge amount of capital trying to get into logistics, whether into one of our existing funds or the mega deals. That’s generally because the returns are just extremely attractive compared with what’s out there.”
“We are aware of a number of investors still looking to get a foothold in Europe directly, either building a platform or individual assets, that have been frustrated but are continuing to look for product. We do not see any reason why that will stop in the foreseeable future.”
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