After 75 years of globalised, export-led production, Europe is realigning its industrial base for resilience. Latest research from Aberdeen Investments shows some have bigger mountains to climb than others, and it has been reported that the EU may launch the Industrial Acceleration Act (AAI) within the month.

New research from Aberdeen Investments assessing fourteen European countries reveals that the real estate markets are best positioned to lead Europe’s industrial reset, with industrial and logistics best placed to create resilience. Germany is the standout leader, followed by the Netherlands, the UK, France and Spain, respectively.

Aberdeen identified 10 key factors that influence a country’s capacity to capture demand arising from European reindustrialisation trends. The research, published this week, comes as increased fiscal initiatives for defence and infrastructure spending are seen as critical for Europe’s economic resilience, security and growth.

“In an uncertain, increasingly fragmented world, where alliances are shifting and supply chains are increasingly stressed, countries and governments need resilience. Policymakers across Europe are prioritising the development of domestic and regional capabilities,” Craig Wright, head of European real estate research, Aberdeen Investments, said.

“The challenge creates opportunities. We expect to see stronger cash flows for industrials and logistics, stronger rental growth, and urban locations close to large pools of skilled labour, with higher levels of on-site security. Rental growth is likely to comfortably beat inflation long term.”

The Aberdeen Investments European Industrial Market Assessment ranks real estate markets across 10 categories: economic growth, economic resilience, risk, liquidity, industrials, logistics depth, nearshoring potential, defence spending and security, e-commerce penetration and return forecasts. Countries scored from five (best) to one (weakest), based on an assessment of current resilience, defence spending and capacity for growth. Each factor was anchored to reputable third-party indices and externally validated datasets to ensure robustness and comparability across countries.

Germany is the leader, averaging a score of 4.7, with a top score of five in eight out of the 10 categories, the firm said. The Netherlands, in second place, averaged a score of 4.1, scoring five in three of the 10 categories (industrial index, logistics index and e-commerce penetration).

The UK ranked in third place, with an average score of 3.9, but with a top score of five in four key categories (risk navigator, liquidity, defence/security and e-commerce penetration). This puts the UK in good stead to benefit from reindustrialisation and growing ties to the rest of Europe. While the UK had a weaker economic resilience score, the data from Oxford Economics doesn’t show a huge spread across the major European economies, and the UK only just slips into a two rating in Aberdeen’s methodology.

“Years of hyper-globalisation have made Europe vulnerable in sectors like security, energy, chemicals, critical minerals, food, automotives, and technology – value chains that have been fractured and need urgent reconstruction,” Wright continued. “As a result, the continent now faces the consequences of overreliance on Asia for economic inputs and the US for security. We are keeping an open mind to where new opportunities will emerge, but we believe that established locations in Germany, France, the Netherlands, Spain and the UK will offer the most compelling opportunities in the future.”

“All this needs to be balanced with the need to decarbonise and the need to convert a growing share of what we already have in brownfield sites into modern facilities that are fit for the future. We won't be zoning more land for industrials and logistics in our major cities given the pressure to find more sites to accommodate more housing.”

The six big themes of the European reindustrialisation wave include security, defence and technology; food and agriculture; textiles and clothing; energy and power; machinery and automotives including the EV transition and localisation of battery/chip supply chains; and pharmaceuticals.