Germany has topped the rankings as the most attractive country for logistics investment, ahead of France and the UK.
According to the latest findings from Savills, interest from investors has pushed prime yields in Germany down by 300 basis points over the past five years.
These now range between 4.1% and 4.4%, the lowest seen across Europe, after the UK.
This was largely chalked up to Germany’s proximity to large customer hubs in Poland, the Czech Republic and Austria, and to smaller ones in Switzerland and Luxembourg, where the share of cross-border e-commerce is high.
France and the UK ranked second and third respectively, with the former posting a prime logistics yield of 4.75% in the Île-de-France region.
In the UK, which has the most mature market and remains ahead in the property cycle, Savills said that the potential for further growth is reducing. It pointed to research by Statista, which showed that e-commerce is expected to increase by 6.7% pa over the next five years – the lowest level in western Europe.
The prime logistics yield in London sits at 4%, the lowest in Europe.
The Netherlands and Ireland rounded out the top five, with each containing markets that are expected to mature.
Marcus de Minckwitz, director of regional investment advisory EMEA at Savills, said: “It is clear that Western Europe is leading the charge when it comes to e-commerce penetration and subsequent investment into the logistics market, although its effects can be felt across the continent.”
The majority of e-commerce sales (58%) were generated in the UK, Germany and France. However, e-commerce is gradually spreading across Europe, posting above 30% annual growth in central and eastern Europe over the past five years.
Lydia Brissy, director of European commercial research at Savills, said: “As the logistics sector in countries such as Germany, France, the UK and the Netherlands continues to boom, we can expect to see central and eastern Europe catch up.”
On average, e-commerce sales represented 7.5% of total retail sales, led by the UK. It remains the key driver behind occupier demand, with e-commerce expected to grow by 8.5% and 9.5% in the next two years.
Over the past two years, the total volume of logistics investment across 32 countries analysed in the report increased by around 12% annually.
Savills said it expected this trend to continue throughout 2019, especially for investors aiming to distance themselves from strong “office exposure”.
Meanwhile, prime logistics yields are predicted to harden in most European countries – bar Norway, where they are expected to soften, and in the UK, Germany, France, the Netherlands and Italy, where they will remain static.
To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette
