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Research

Report

European Industrial Bulletin September 2011


European Industrial Bulletin: A year of two halves?

Even in the face of weakening economic momentum, the overall European industrial market continued to give a robust performance during H1 2011. This was particularly true in the occupational distribution and logistics markets, which experience ongoing growth driven, above all, by strong domestic demand in emerging markets. On the other hand, industrial investment fell behind overall real estate investment activity as tight product, particularly in the most popular Western European markets, held back volume growth despite increasing development pipelines.

Investment Markets

  • Limited prime product in core markets coupled with uncertain economic outlook are contributing to slowing activity
  • Core Western European markets are still attracting the highest interest, but there is growing interest in opportunities in Eastern Europe
  • International capital is back in the market while domestic European investors have become net sellers
  • Prime yields in most markets are likely to have reached a floor in the current cycle

Occupier Markets

  • Upbeat occupier activity driven by buoyant global demand in H1 2011 is not likely to be matched in the remainder of the year as economic uncertainty increases
  • Germany and parts of Eastern Europe are likely to remain the most resilient markets to weakening economic growth prospects
  • Diminishing modern supply has led to hardening occupier conditions but faltering economic growth is likely to dampen growth in H2 2011

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