Non-Dom Money takes 80% slice of Central London's commercial property market

Private equity interest in the sector persists

Prolonged external uncertainties and strict quarantine measures have begun to infiltrate the logistics sector.

With global economic uncertainties and disruptions to global supply chains ongoing, local air freight and container throughputs declined in the first eight months of the year.
As logistics demand dwindled, overall and modern warehouse rents registered 0.8% and -0.1% growth in Q3/2022 respectively, while both overall and modern warehouse vacancy rates rebounded slightly to 2.1% and 1.4% over the same quarter.
While interest rate rises have deterred local investors and developers, private equity was still keen to acquire en-bloc and whole floor warehouses for investment.
Looking ahead, while new supply has been gradually taken up, uncertain business prospects may prompt operators to become more conservative when making relocation and expansion decisions.
An escalating cost of funds as well as slowing rental growth may test investors’ appetite for logistics assets with positive yield carry quickly diminishing over the coming months.

Fund investors are still keen on logistics assets despite a relatively quiet third quarter. Looking ahead, while new supply has been gradually taken up, uncertain business prospects may prompt operators to become more conservative when making relocation and expansion decisions.
Simon Smith, Savills Research & Consultancy