How was investment in industrial property last year and what can be expected this year? We took a look at it with Vítězslav Doležal, Investment Adviser at CBRE.
Photo: P3 Prague Horní Počernice
Approximately EUR 1.05 billion has been invested in industrial real estate over the past twelve months in the Czech Republic. CBRE contributed to almost 94% of the volume of these transactions. In 2016 alone, industrial ranked second from all real estate investments in the Czech Republic, with only office space exceeding it. Most were mostly smaller transactions, but one was record setting – the sale of the European real estate portfolio of the international company P3, part of which was also located in the Czech Republic, mainly in Prague, Liberec and Pilsen.
Not only 2016 was record setting
“The value of the entire European transaction was EUR 2.4 billion, and in terms of investment numbers, the market really shifted. The new owner became a Singapore investment fund. This is one of the most important transactions in history,” remarked Vítězslav Doležal, who said that the transaction was the largest not only in the field of industrial property, but also exceeded the size of office or retail transactions. According to him, at the European level it is perhaps comparable to the planned sale of Logicor, which has one logistics park in Prague. The Logicor transaction could be closed this year.
A trend with Asian capital
The sale of the P3 portfolio also indicates one of the trends that can be observed in the area of investment in the industry over the last two to three years – the purchase of Asian capital. “While European, and especially German capital and American capital have dominated, the volume of Asian capital is growing. I would also mention the sale of Florentinum to a Chinese investor. Asian investors have really massive financial opportunities with the surplus money they invest in Europe as part of the geographic diversification of their portfolio,” said Vítězslav Doležal. Otherwise, the Czech market will continue to be stable this year and will be dominated by developers such as CTP Invest, ProLogis and P3, which covered 67% of the market in 2016.
However, as he noted, the companies mentioned have held real estate for a long time, which has an impact on fewer investments, which is another industry trend. “If an investment fund wants to diversify its portfolio, it will not be easy to find an investment opportunity,” added Vítězslav Doležal. According to him, this follows from the fact that industrial prices will go up, as demand in all locations is considerably higher than supply.
The market will remain stable
In 2017, the volume of transactions in the Czech Republic will not be as high as in 2016, when it significantly increased sales of P3. However, at the European level it will be offset by last year, as the volume will increase by the sale of Logicor. “The prospective investments will be medium or smaller in the Czech Republic, but the number of transactions will remain stable,” predicted Vitezslav Dolezal. He further added that CBRE aims to remain the market leader in industrial and logistics sector consultancy and is working on other transactions. “Although transactions will not reach the epic scale of P3 this year, we want to help investors find the right opportunities for sector diversification of their portfolio,” he concluded.