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Warehouse investment sees 50% rise

Posted by Trevor
February 14, 2014 in Industrial

Recent figures have suggested that investment in UK distribution warehouses has increased by nearly half in the last year.

The data, released by international property agent Savills, shows that there was £2.5 billion worth of transactions in 2013. This is a rise of just under 50 percent since 2012 and represents a record year for the sector.

The global estate agent said that there were a number of reasons for the findings – pointing to continued growth in the industry, whilst investors continued to be drawn from many different primary business areas.

With investors coming from both at home and abroad, the firm’s investment director, James Williams, said:

“Interest from investors in the logistics sector has gained incredible momentum over the last 12 months. While UK funds and REITs [Real Estate Investment Trusts] have dominated the market, we are also seeing increasing interest on a global platform from a diverse range of buyers from the USA, Russia, the Middle East and South Africa.”

Williams went on to say that the increased demand has subsequently resulted in greater yield compression in the sector. With investment in the distribution  warehouse flooring  warehouse flooring all other sub-sectors, returns in excess of 15 percent have been realised.

These yields have been seen in short, mid and long term investments, showing that re-letting refurbished premises is a growing opportunity too.

Though not expected to rise at the same rate as last year, Savills said it expects demand to remain strong with yield compression likely to continue.

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