Industrial investment down 55%, DJ says
09:56 | 04.06.08
The total value of industrial investment deals completed in the first quarter of 2008 is down by 55% on last year's figures, according to research by Drivers Jonas.
However, Drivers Jonas says that investor interest for industrial assets – which are now back to mid 2005 yields – is returning.
Anthony Duggan, head of DJ Research, said: 'Our research shows that industrial is now transacting at 150 bp higher than this time last year and IPD industrial initial yields are back at mid 2005 levels. We are seeing renewed investor interest at these levels - investors are looking at sheds in the new "old world" where property fundamentals (income return and asset management potential) are again key drivers of performance.'
Marketing periods
Yields are moving out and sales are taking longer to complete, DJ reported. Marketing periods are now on average six months.
John Rodgers, head of DJ Industrial Investment, says: 'We are seeing good interest for industrial and the right assets are still attracting a strong following. What are the right assets? Fundamentals such as proximity to market, affluent population and tight land supply/planning regime are key.
'For example, data shows that the supply of industrial land in London has fallen 35% over the last 10 years. This should mean more stable land values and less competition for occupiers - a good base to work your outperformance. It is also important to bear in mind new trends such as internet shopping, Green development and green transport as these will continue to create fresh occupier demand.'
Recommended investment
DJ also marks out the areas it recommends for investors in 2008, such as trading estates near major regeneration areas such as Ebsfleet and large, sustainable distribution units near major transport nodes such as airport and sea ports.
Duggan said: 'So where should you buy a distribution warehouse? Whilst every opportunity should be closely scrutinised, if the covenant risks are correctly priced, the following locations remain Drivers Jonas' favoured choices – eastern M25, lower M1, Midlands, Southampton and Avonmouth and the M60.'
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Nancy E. Griffin
Kinlin Grover GMAC Real Estate
Certified International Property Specialist
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