Momentum continued in industrial & logistics and living sectors in Q1 2021 across EMEA region, says Colliers

Ups and downs

The industrial and logistics sector has seen continued strong momentum while large scale office transactions have slowed in European investment volumes, as many countries saw overall activity halve in comparison to Q1 2020, notes Colliers in its latest EMEA Markets Snapshot Capital Markets Q1 2021.

Richard Divall, Head of Cross Border Capital Markets, EMEA at Colliers, explains: “The industrial and logistics sector continues to thrive with falling yields in almost all markets and premiums being paid for portfolios. Investors are willing to go up the risk curve in this sector, although some investors are showing initial concerns to pricing and whether developers will push rents far enough in a falling yield cap rate environment.”

Investment into direct European real estate reached EUR51 billion, a 35 per cent fall on Q1 2020. However, it is worth noting that Q1 2020 was the second highest Q1 figure posted in the last 10 years, and the figure masks a range in performance across countries.

Divall continues: “Due to the third wave of the pandemic in Europe many tender processes have been delayed, however there is activity in ‘off market’ and small tender processes. Despite the absence of large scale office transactions in Q1, sentiment remains positive for low risk, core assets in prime locations and we expect several large scale assets to be marketed in Q2 2021 and, when the return of international travel permits, volumes to pick up.”

The living sector continues to have high demand in the Nordics, as well as in Italy and CEE as an emerging asset class. Positive sentiment is also returning to the UK student housing market. There continues to be significant interest in the alternative sectors including life sciences, senior living and asset backed by technology sub sectors.

The hospitality sector is seeing more interest with several markets reporting transactions for the first time since the pandemic started. Several core and forward hotel deals have entered the market and great anticipation towards new pricing awaits.