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PROPERTY EU EUROPEAN LOGISTICS INVESTMENT BRIEFING
RICHARD HOLBERTON, SENIOR DIRECTOR, EMEA RESEARCH, CBRE
FEBRUARY 19TH 2015
– Economy
– Market Activity
– Forecasts
– Issues
AGENDA
ECONOMY
2014
Some Alarms…
…and Some Deja Vu
Eurostat Economic Sentiment Indicator
Improving Economic Outlook
-10 -5 0 5 10 15 20 25
Finland
Austria
France
Italy
Denmark
Belgium
Romania
Poland
Greece
Netherlands
Spain
EU Average
Portugal
Germany
Czech Republic
Sweden
Ireland
UK
Hungary
difference from the long-run average
Oct-Dec 2014
Oct-Dec 2013
Eurostat Economic Sentiment Indicator
Periphery Improving Against Core Eurozone
Ez Core (includes Italy)
Ez Periphery (includes Spain)
Northern
-40
-30
-20
-10
0
10
20
2006 2007 2008 2009 2010 2011 2012 2013 2014
Eurozone to Lag Behind the Rest
Annual average GDP growth 2015-19
Source: Oxford Economics
0 1 2 3
Russia
Eurozone
Nordics
UK
Central Europe
0 1 2 3
Italy
France
Netherlands
Germany
Spain
Ireland
10-year Government Bond Yields
Source: Macrobond
0
1
2
3
4
5
6
7
8
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Germany
Italy
UK
MARKET ACTIVITY
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008 2009 2010 2011 2012 2013 2014
WAREHOUSE/ LOGISTICS TAKE-UP, SELECTED Warehouse/Logistics Take-up
Selected Locations, (Y on Y % Change)
Where ?: France; Netherlands; Italy;
Poland (& other CEE)
Who?: National and international
retailers; food manufacturing;
pharma; 3PLs and parcel services.
Focus on prime
11 CBRE | JANUARY 2014
The Demand “Dumbbell”
XXL warehouse platforms in
strategic locations
Urban logistics & parcel
delivery centres
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Dec-8
8
Dec-9
0
Dec-9
2
Dec-9
4
Dec-9
6
Dec-9
8
Dec-0
0
Dec-0
2
Dec-0
4
Dec-0
6
Dec-0
8
Dec-1
0
Dec-1
2
Dec-1
4
Retail Index Industrial Index Office Index All Property Index
EMEA Prime Rent Index
Y-O-Y Change (%)
Source: CBRE Research
0
50
100
150
200
250
300
0
10
20
30
40
50
60
70
80
90
Q4 2
006
Q2 2
007
Q4 2
007
Q2 2
008
Q4 2
008
Q2 2
009
Q4 2
009
Q2 2
010
Q4 2
010
Q2 2
011
Q4 2
011
Q2 2
012
Q4 2
012
Q2 2
013
Q4 2
013
Q2 2
014
Q4 2
014
CREInvestment
12 MonthRollingTotal
Q4 investment turnover close to record level
Commercial Property Investment In Europe
Billion € Billion €
Source: CBRE Research
Industrial & Logistics Investment, Europe, 2003-14
0
5
10
15
20
252003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
France Germany UK Benelux Nordics Southern Europe CEE Other
Billion €
Source: CBRE Research
15
Property Investment In Europe By Sector
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Q4 2
006
Q2 2
007
Q4 2
007
Q2 2
008
Q4 2
008
Q2 2
009
Q4 2
009
Q2 2
010
Q4 2
010
Q2 2
011
Q4 2
011
Q2 2
012
Q4 2
012
Q2 2
013
Q4 2
013
Q2 2
014
Q4 2
014
Office
Retail
Industrial
Source: CBRE Research
Share of Investment Turnover (%)
FORECASTS
Shoulder To Shoulder ?
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Mar-
91
Feb-9
2
Jan-9
3
Dec-9
3
Nov-9
4
Oct-
95
Sep-9
6
Aug-9
7
Jul-98
Jun-9
9
May-0
0
Apr-
01
Mar-
02
Feb-0
3
Jan-0
4
Dec-0
4
Nov-0
5
Oct-
06
Sep-0
7
Aug-0
8
Jul-09
Jun-1
0
May-1
1
Apr-
12
Mar-
13
Feb-1
4
Jan-1
5
Dec-1
5
Nov-1
6
Oct-
17
Sep-1
8
Retail Industrial Office
CBRE EMEA Prime Yield Index
Weighted Average Prime Yield (%)
Source: CBRE Research
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Mar-
91
Feb-9
2
Jan-9
3
Dec-9
3
Nov-9
4
Oct-
95
Sep-9
6
Aug-9
7
Jul-98
Jun-9
9
May-0
0
Apr-
01
Mar-
02
Feb-0
3
Jan-0
4
Dec-0
4
Nov-0
5
Oct-
06
Sep-0
7
Aug-0
8
Jul-09
Jun-1
0
May-1
1
Apr-
12
Mar-
13
Feb-1
4
Jan-1
5
Dec-1
5
Nov-1
6
Oct-
17
Sep-1
8
350 bps
200 bps
Present yield relative to high and low of current cycle (%)
Prime Warehouse/Logistics Yields
Source: CBRE Research
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Lo
nd
on
Fra
nkfu
rt
Ha
mb
urg
Mu
nic
h
Sto
ckh
olm
Am
ste
rda
m
Ro
tte
rda
m
Ma
nch
este
r
Bru
sse
ls
Pa
ris
Du
blin
Wa
rsa
w
Pra
gu
e
Ba
rce
lon
a
Ma
dri
d
Mila
n
Lis
bo
n
Bu
da
pe
st
Current yield Cyclical low Cyclical peak
Industrial Yields Outlook
Source: CBRE
-1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6
Dublin
Budapest
Barcelona
Moscow
Madrid
Vienna
Milan
Helsinki
Prague
Manchester
Hamburg
Bratislava
Frankfurt
Warsaw
Berlin
Brussels
Paris
Oslo
Amsterdam
Munich
London
Yield Shift (BPs) 2015-19
Industrial Rental Growth Outlook
Source: CBRE
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
Brussels
Barcelona
Hamburg
Bratislava
Budapest
Berlin
Stockholm
Amsterdam
Munich
Paris
Warsaw
Milan
Madrid
Frankfurt
Manchester
Prague
Moscow
London
Dublin
Oslo
%pa
Rental Growth % p.a. (2015-19)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
4.0
2.0
0.0
2.0
4.0
6.0
8.0
10.0
London
Oslo
Mancheste
r
Wars
aw
Sto
ckholm
Dublin
Berlin
Fra
nkfu
rt
Munic
h
Am
ste
rdam
Bru
ssels
Barc
elo
na
Paris
Mila
n
Madrid
Pra
gue
Prime Yield 10-year Government Bond
Spread ERV Growth % p.a. (rhs)
Yield Gaps And Rental Growth
Source: CBRE Research, Macrobond
Prime industrial yield relative to 10-year government bond(%) Q4 2014
Industrial Returns Outlook
Source: CBRE
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Oslo
London
Munich
Amsterdam
Berlin
Brussels
Hamburg
Paris
Frankfurt
Warsaw
Bratislava
Manchester
Milan
Prague
Madrid
Barcelona
Budapest
Dublin
Moscow
%pa
Returns % p.a. (2015-19)
• Differences from 2007…..
� Prime property yields comfortably above long-term interest rates
� Investment being primarily financed by equity rather than debt
� And economies and leasing markets (mostly) improving
• ……Doesn’t mean that there aren’t risks
� Upward yield corrections if occupier market expectations are dented by
financial / political events (e.g., Grexit)
� Some protection for industrial & logistics as its not a “growth play”, but
exchange rates (actual and anticipated) may be more of an issue
• Pricing : cheap or expensive: ?
• Where next for capital: secondary assets, niche markets….?
Issues
PROPERTY EU EUROPEAN LOGISTICS INVESTMENT BRIEFING
RICHARD HOLBERTON, SENIOR DIRECTOR, EMEA RESEARCH, CBRE
FEBRUARY 19TH 2015
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