Tag Archives: norway
Investment In European Industrial Property Returns To Pre-Crisis Levels
http://www.ft.com/cms/s/0/b98e961e-feac-11e2-b9b0-00144feabdc0.html#ixzz2bHs44RGa August 6, 2013 Investment in European industrial property returns to pre-crisis levels By Ed Hammond, Property Correspondent Spending on European industrial property has returned to pre-financial crisis levels as a range of international investors vie for warehouses, logistics hubs and small factories, underscoring the improving sentiment over the continent’s economy. Investment in the sector, driven by pension funds, private equity investors and sovereign wealth funds, hit €6bn during the first six months of the year – 60 per cent up on last year and the highest level since 2007 – according to new data from Jones Lang LaSalle, the property consultancy. The sudden surge in demand for the esoteric asset class, among the worst hit in Europe’s property crash, suggests a revival in investor confidence over the prospects for the retailers and consumer goods businesses that dominate the leaseholder registers of industrial landlords. In the first years of the financial crisis, vacancy rates soared as companies cut back on their surplus stock, and small manufacturing businesses, which also account for a lot of warehouse space, were closed or mothballed. Tom Waite, director of European capital markets at JLL, said the demand for industrial property had been rising steadily for the past 18 months. He added, however, that a lack of new, well-located stock had stifled the ambitions of some investors. “There is now gradually more investible stock coming on to the market as continued occupier demand is leading to new development. As a result, we now expect full year 2013 investment to break the €10bn barrier – which would be the third-strongest result ever recorded,” he added. The investment this year has been centred on the continent’s largest property markets – France, Germany and the UK – which accounted for 60 per cent of all transaction value. The largest deal of the period involved a €1.2bn portfolio acquisition by the joint venture of property group ProLogis and Norway’s oil wealth fund. The sector has also proved particularly popular with private equity funds, which have started to look beyond the Europe’s now highly competitive office and shopping mall markets. Blackstone, the US private equity firm, has been among the most active investors in the industrial sub-sector, creating a specialist logistics and warehouse property business. One of the main attractions of industrial property, which represented 10 per cent of Europe’s total real estate investment market during the six months, is that yields on warehouses are typically much higher than those available on prime offices or retail property. Continue reading
European Commercial Property Investment Finding Its Legs
By +Liam Bailey Wednesday 24 July 2013 According to new data from CB Richard Ellis investors ploughed 31.1 billion Euros into European commercial property in the second quarter of this year. This is a 13 percent increase on the figure recorded in Q2 2012 and the third consecutive quarter of strengthening activity in the European commercial sector. “This growth in commercial property investment activity comes at a time when other asset classes have been experiencing increased volatility due to concerns over the future of quantitative easing (QE) and further issues surrounding the euro,” Jonathan Hull, head of EMEA capital markets, CBRE said in the release. According to the report some 28.4 billion Euros has been invested in commercial property in still-dominant Germany over the last 12 months, which is up 36 percent compared to the previous 4 quarters. Sweden and Norway remained strong, as they have for several quarters. Unfortunately the same can’t be said for the UK where investment activity decreased 6.5 percent in an annual comparison. Meanwhile Italy, Spain, Portugal and Ireland, which were worst affected by the credit crunch and subsequent Euro crisis continued to show recovery with a combined total of 2.5 billion Euros invested in commercial property during the second quarter. This is an increase from less than 1 billion Euros last year. The CBRE data tallies with that recently released by Cushman and Wakefield which said that European commercial investment has hit a 5 year high . Continue reading
Investing In Agriculture – July 2013
Published by Investment Adviser | Jul 01, 2013 The term agriculture usually brings to mind crop prices and the effects of drought or flooding on harvests, but the sector is more diverse than many realise, and weather is not the main driver of investment trends. Instead, the biggest effect on agriculture investing is the improving living standards and changing food habits of the populations of emerging and developing countries. Jake Robbins, manager of the Premier Global Alpha Growth fund, says: “As people become wealthier they are shifting their diet from basic crops, such as rice and potatoes, and eating a lot of meat. So as the demand for meat rises the demand for crops rises almost exponentially. “That is the biggest driver. We saw in 2007-08 that when supply cannot meet demand, you get huge spikes in the price of crops and meat.” Skye Macpherson, portfolio manager, global resources at First State Investments, agrees that this trend is leading to increased demand for many agricultural commodities such as dairy, sugar and meat. She adds: “Interestingly, higher meat consumption is having a multiplier impact on grain demand as animals are quite inefficient converters of grain. Impacting the listed agricultural equities is ongoing M&A in the sector, as unique and high-quality assets are being consolidated. “Most recently we saw activity in the Australian grain-handling industry with ADM bidding for GrainCorp, and in the US pork production sector, Shuanghui International bidding for Smithfield Foods. The sector is also growing, with numerous IPOs and capital raisings taking place in the past 12 months.” Mr Robbins adds that M&A activity has also been seen in Brazil and Norway, highlighting the fact that industry players value these businesses higher than the market does. This is because both the input cost for the grain to feed the chickens and the price you sell the end product for can fluctuate widely. “So it is difficult to predict what earnings will be in a quarter or any given year, so while the long-term trends are very positive because the short-term earnings are very unpredictable, the stockmarket doesn’t like that and so tends to value them quite lowly.” But while changing food habits is one trend, food supply in general and the effect of freak weather remains a factor in the sector, with crops one of the most popular investments. Mr Robbins notes the ‘blue-chip’ option in this area is Monsanto, which develops genetically modified seeds to increase crop yield. “The only problem is we look at stocks for growth, quality and value, and it has got loads of growth and quality but it always looks very expensive, so we haven’t managed to buy that yet.” Instead, as a cheaper way to get exposure he highlights Bayer, a German pharmaceutical company with a division focused on crop sciences that has been growing very quickly. Mr Robbins adds: “Last year was very poor in terms of the harvest, particularly in America as they had a huge drought and a lot of corn was ruined. So currently corn inventories globally are very low. It will take several years of good harvests to rebuild those inventory levels… so we do like corn and any exposure is positive.” Ms Macpherson adds that from a valuation perspective, it has been a volatile 12 months for the sector, but one that has created opportunities. “A significant drought in the US saw soft commodity prices like corn, wheat and soy skyrocketing in the middle of 2012, only to sell off towards the end of the year and into 2013 on expectations that both South America and the US would harvest large crops.” However, Desmond Cheung, co-manager of the BGF World Agriculture fund, warns that investors can get very fixated on crop price developments when a lot of sentiment is already factored in improved supply and lower prices. “Investors should not really be taking the view that the market does not understand the supply improvement. In the past two to three years we feel people look at crop prices as a gauge on whether or not this sector is attractive, but it actually misses out a big part of the investment universe. “We think there is a lot of exciting medium-term development, especially in downstream and midstream firms that would offset some of those firms investors would have in the upstream sectors.” When looking at agriculture, it’s clear there are opportunities globally and with increased M&A action, investors need to take a look at the wider picture instead of only focusing on crop prices. Nyree Stewart is deputy features editor at Investment Adviser Continue reading
