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TEHRAN, Mar 05 -Online retailers racing to build warehouses in central Europe are propelling the region’s real estate market to new heights and Asian investors on the hunt for higher yields are getting in on the act.
TEHRAN, Young Journalists Club (YJC) -Short distances to customers in bigger markets such as Germany, cheaper labor costs and good transportation links all helped attract a record 2.8 billion euros ($3.2 billion) of investment into the region’s warehousing market last year.
Singapore’s sovereign wealth fund GIC, which bought Prague-based P3 Logistic Parks in 2016, is now planning to double its 4.1 million square meters of real estate assets in the region in the coming years through acquisitions and by buying land.
“Five years ago, I would not have expected to see Asian capital in the Czech Republic and Poland,” said Otis Spencer, P3’s chief investment officer. “What we have seen is more groups from Asia specifically targeting logistics assets.”
P3 is looking to close a number of land deals in Poland and is scouring Romania and Slovakia for targets as e-commerce gives another boost to a sector already buoyed by manufacturers relocating operations to central and southeastern Europe.
“We are seeing more e-commerce related tenants and we are going to see this market adapt to those needs,” Spencer said. “The quality of asset you can get versus what you get in western Europe is higher for the same relative price.”
The attractive returns from warehouses are both boosting investment from abroad and also propping up the wider commercial real estate market - despite signs of cooling economies in emerging Europe, market participants say.
Online retailers Amazon, Tchibo and Zalando - which opened a warehouse in Szczecin, Poland, in December and has plans for three more in the country - are just some of the e-commerce firms expanding in the region.
REAL ESTATE HEDGE
Yields on industrial and logistics properties in the region range from 5.5 percent in Prague to 9.5 percent in Sofia, compared with 4.5 percent in Paris or Berlin, according U.S. real estate company Colliers International Group.
“Not only is there local consumption and growth but the big western European e-commerce operators are seeing Poland and the Czech Republic as places to set up locations,” said Robert Dobrzycki, chief executive of Panattoni Europe, a commercial real estate developer based in California.
“We are building German-driven e-commerce buildings in central Europe. On top of that we see a huge trend of investors outside the region trying to diversify and hedge against a slow-down in other real estate sectors,” said Dobrzycki.
In October, Singapore-based Mapletree Investments announced the $1.1 billion acquisition of a global logistics portfolio from Prologis, with properties in the United States, France, Germany and also Poland.
Source: Reuters
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