With regard to the logistics and warehouse property market, 2014 was a record year to date in terms of both the demand and volume of investment transactions concluded across the Central and Eastern Europe region – as follows from the latest report relating to the logistics and warehouse property market in Central and Eastern Europe compiled by BNP Paribas Real Estate experts. Additionally, the report’s authors draw attention to the high level of diversification between individual countries as regards their macroeconomic situation, progress in respect of transport infrastructure, market maturity, as well as the number of clusters, investment opportunities and potential for growth of the logistics and warehouse sector.
“Last year was a time of extremely dynamic growth in the logistics and warehouse property sector across the Central and Eastern Europe region, in particular in terms of investments. The value of transactions achieved a record level in excess of 2.2 billion euro, and the share of this particular sector in the total volume of transaction has never before been as great, i.e. at a level of approx. 30%. Investors spent the most of their capital on warehouses in the Czech Republic and Poland, i.e. 700 million euro in each of these countries.” – notes Anna Staniszewska, Head of Research and Consultancy at BNP Paribas Real Estate.
The latest report, compiled by the Research and Consultancy Department in collaboration with the Logistics and Warehouse Property Department as well as the Capital Markets Department at BNP Paribas Real Estate, contains an analysis of the current trends in selected countries in Central and Eastern Europe. The market potential in Poland, the Czech Republic, Romania, Slovakia and Hungary has been analysed while taking into account the countries’ macroeconomic situation, progress in respect of infrastructure, availability of land and price expectations.
The experts at BNP Paribas Real Estate estimate that the total supply of modern logistics and warehouse space in the countries analysed amounts to approx. 20.65 million square meters, out of which 43% is located in Poland.
Anna Staniszewska, the author of the report, names Poland as the country offering the most variety as regards quality and diversity of logistics and warehouse properties. Poland’s area can be divided into 6 main and 4 developing clusters. Additionally, it is characterised by the greatest demand, which in 2014 reached a record value of 2.5 million square meters. The second market in terms of size is the Czech Republic (26% of all supply in the Central and Eastern Europe region), which last year were in the forefront as regards of the level of lease and investment transactions concluded. The remaining countries have a similar share in the supply of logistics and warehouse space (16% Hungary and 11% Romania)
The markets analysed show differences in respect of rent levels. Due to the maturity of the Polish and Czech markets, rents in these countries are at the highest level and amount to between 4.5 and 5.5 euro per sq m/m for prime facilities, while in the remaining countries they are at a level of between 4.0 and 4.5 euro per sq m/m.
Nonetheless, the report highlights certain common trends, i.e. drop in vacancy rates and yield compression, which translates into a value increase. The experts at BNP Paribas Real Estate estimate that at least 10 million square meters of logistics and warehouse space could be the subject of future investment transactions; however, this does not mean that they will necessarily be concluded in respect of prime facilities.
“We are observing this trend in Poland at the moment where investors are more and more frequently attracted by logistics and warehouse facilities. Investors seeking higher rates of return on their investment are now looking to other markets in the Central and Eastern Europe region, in particular Romania and Hungary, where the profitability figures are higher than in the Czech Republic and Poland by as much as 2 percentage points. Due to the limited availability of institutional products on these markets, investors have to be prepared to purchase facilities that require greater additional outlays and active management before their value can be increased.” – comments John Palmer, Head of Capital Markets, Logistics and Warehouse Property and Valuation sector, CEE, BNP Paribas Real Estate.
Despite the approaching slowdown, the mood on the logistics and warehouse property market remains positive.
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