So warehouse space in the UK is looking particularly toppy. Valuations are pretty much at all-time highs according to analysts. And so we are saying now that you should be looking at Europe where an online boom is likely to make warehouse space very attractive. I'm Aimee Donnellan, I cover property, retail and insurance for Reuters Breaking News in London.
The UK has had a huge boom in online retail which has been very bad news for the high streets but very good news if you own a warehouse which means basically values are very high. We haven't seen the same thing in Europe. In Europe, there's been a bit of a low or a lag.
But that's set to change next year. So there are analysts now who expect growth in online retail in Europe to go up by about 12% every year for the next five years. And already, we're seeing Amazon hiring about 18,000 people in Europe and many of them will probably be working in warehouses and will need property to go in.
You're also seeing Ocado, a UK online retailer, partnering up with Casino, a big French retailer, to build a big robotics warehouse. And as more and more retailers try and keep up with the likes of Amazon and Ocado, you're gonna see those valuations get higher and higher. So in France and in Germany, Berlin and Paris are the two areas where most people would like to have warehouses but there is quite a few restrictions on building.
And you need to build these warehouses to make them serviceable. So again, that could cause valuations to go up cuz there will be limited supply. If you look around, there are not many places where you could get a 7% return. Even if you look at, let's say, German bunds, a very safe place to put your money into, you're only getting less than 1% for that.
But if you invest in warehouses at the moment,
are saying you could get about 7%. And they're still just povering around the ten year average. So they haven't come down in the same way that the UK has, or even offices in London, or offices throughout Europe, or even retail.
So as the future becomes online, investing in warehouses seems like a smart move.