Savills plc

11/01/2018 | Press release | Distributed by Public on 11/01/2018 06:19

Industrial portfolios could boost investment volumes by £2.5bn in Q4 & put 2018 on track to reach £9bn - Savills

In its latest Market in Minutes report, the international real estate advisor says that industrial investment volumes stood at £6.2 billion as of the end of Q3 - a 34% decline year-on-year - but, according to Savills, this is due to a stock supply issue. Given the high returns forecast for industrial property over the next five years, the majority of investors are choosing to hold assets rather than trade, leading to a lack of supply available for purchase, despite the weight of money looking to invest in the market.

Tom Scott, director in the investment team at Savills, comments: 'In previous market cycles, industrial developers generally traded stock once complete, typically to UK or overseas institutions. However, many historical developer traders are now developer holders and are keeping stock in their own funds and maximising income returns, leading to a fall in transactions thus far this year. But the final quarter will see volumes rise given the number of portfolios in the market and the current amount, and depth, of investor interest.'

Kevin Mofid, head of industrial research at Savills, adds: 'In the longer term, new entrants to the UK logistics market may stimulate investment volumes into 2019 and beyond. If the model these developers have deployed successfully in the USA and Europe is replicated in the UK, we expect to see this new stock traded once let, increasing stock availability in the investment market.'

Read Savills October Market in Minutes in full here.