Logistics is emerging as a distinct and attractive commercial property asset class according to the Investment Property Databank (IPD). The IPD Pan-European Logistics Performance Report published last week shows that logistics property ranks second only to retail in terms of returns.
Logistics properties are defined by the IPD as distribution warehouses with a floor space of 10,000 sq metres or more built between 1998 and the present day. The report, the first to focus specifically on this category of property, measured the performance of 757 properties across 20 European countries.
It shows that the return from logistics properties outperformed other categories throughout 2011. It also proved to be the best performing property category over a period of one to five years in most European markets.
Sweden registered the strongest performance, with a 10.7 per cent return, while Portugal generated the lowest income return at just 2.9 per cent. In the UK, capital values rose by 3.7 per cent.
Oliver Wissel, of BNP Paribas Real Estate, says that logistics properties are now attracting strong demand from institutional investors seeking a stable return. The growth in online retail is cited as further fuelling the demand for these large warehouses, particularly those in prime locations, across Western Europe.
James Markby, head of European industrial and logistics investment at CBRE, who spoke at the launch of the report said;
“Analysis clearly shows that the logistics sector offers an increasingly attractive investment option for a wide range of different investor types and motives.”
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