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Overseas investors snap up Midlands warehousing

31 October 2023

Overseas investors spent £600 million on warehousing in the Midlands in the third quarter of 2023 as international investors bet on the continuing strength of the UK’s logistics heartland according to real estate analytics firm CoStar Group.

By Liza Helps, Property Editor Logistics Matters

THE FIRM reported that 75% of the money spent on warehouse investment in the region came from overseas, representing a record 27% share of total industrial sales volumes between July and September.

The analysis by CoStar Group Director of Market Analytics Grant Lonsdale and Director of Market Analytics, Manchester, Giles Tebbitts noted: “These percentages are sharply up on recent trends. Over the past five years foreign buyers were behind 50% of investment in the Golden Triangle, while the area averaged a 13% share of quarterly spend on UK industrial properties.”

Asian buyers, aided by cheaper debt and reduced competition from some other capital sources, have been particularly acquisitive in recent months.

Jing Dong Property’s purchase of the Project Venus portfolio comprising largely of the 1.1 million ft2 first and second phases of Ansty Park in Coventry was the headline foreign deal of the quarter. CoStar’s models estimate the Coventry assets to be worth around £180 million of the £248 million portfolio price.

GIC-owned P3 Logistics Parks’ purchase of the Javelin portfolio, consisting of two fully leased logistics schemes in Northamptonshire, for £100.9 million, or a 5.1% yield, was another key deal.

Overseas volumes were further boosted by US investors, the heaviest buyers of UK logistics properties in recent years.

Baring’s acquisition of the Zeus portfolio from NFU Mutual a year after pulling out of a deal to buy it for a higher price lifted the US figures. The portfolio containing properties in Corby and Daventry, among other key logistics locations, sold for around £190 million, reflecting a 4.3% yield and a price 19% lower than £234 million reportedly agreed in 2022.

Also of note was Realterm’s acquisition of a 300,000 ft2, cross-docked distribution facility in Hinckley from Equites Property Fund. The Maryland-based investor paid £29.8 million, or a 7.6% yield, for the Tesco-let warehouse.

Meanwhile, Kennedy Wilson added to its UK industrial and logistics holdings with the purchase of Great Bear Distribution’s hub at Moulton Park, Northampton for £12.3 million, or a 4.8% yield. It bought the 100,000 ft2 facility from Fidelity.

The lease on the property expires in October 2025 and offers the purchaser a refurbishment or redevelopment opportunity. Its current passing rent of £6 per ft2 is considerably lower than prime rents in the local market, which stand around £9 per ft2 for big boxes of 100,000 square feet-plus.

The standout deal involving a domestic buyer by a considerable margin was DTZ Investors’ acquisition of Coventry Logistics Park, on behalf of Strathclyde Pension Fund, for £140.4 million, reflecting a 4.5% yield. 

The 785,000 ft2, three-unit scheme with a BREEAM Outstanding rating was acquired from JP Morgan and Bericote Properties. It is fully let to DHL, Geodis and Viad.