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LONDON-Investment activity in the retail warehouse market is due to increase in the second half of 2001, according to new research from FPDSavills. The agent believes that tough planning regulations make the sector attractive to investors.

FDPSavills believe retail warehousing market is undervalued because its has stronger prospects for long-term rental growth compared to other retail sub-sectors. Although all areas of retail property have performed poorly for investors this year–showing just 2.7% rental growth over the 12 months to May 2001–retail warehousing has continued to outperform other segments of the market with rental growth of 3.5%, says the agent.

Mat Oakley, head of commercial research at FPDSavills notes: ‘While the retail sector has been taking a beating over the last 18 months, we believe that tight planning restrictions actually conspire in favour of the retail warehousing sector by making oversupply very unlikely. The investment market is currently restrained but we expect to see more activity during the second half of the year driven by both institutional reweightings and debt-backed buyers.’

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