Industrial and logistics real estate in Europe attracts investors
Logistics real estate in Europe continues to grow steadily. Especially high demand for facilities is observed in the southeastern part of the region, more and more companies are coming to this promising market.
The pandemic has changed global trends, and clearly showed the fragility of the system when production facilities are located in different countries and even continents. Border closures and quarantine restrictions led to massive supply chain disruptions and downtime. To avoid such situations, many companies began to move production facilities closer to their main markets. And South-Eastern Europe was an excellent option for this. It significantly increased the demand for logistics and warehouse real estate in this segment.
Analysts of the company Raben Group, which predicts that rising costs in the European countries with strong economies will prompt businesses to seek other markets where doing business will be cheaper. The Balkans are perfectly suited in this regard, so many companies are looking for high-quality storage and industrial facilities, which will allow transfer of some manufacturing operations from Asia to other states. The process of returning businesses has already started, although it has not gained a mass phenomenon. However, according to experts, the trend will only grow over time. It is known that three new storage facilities are opening this year in Romania, which will be ready to accept companies that previously had offices in Asia.
The countries of Southeast Europe are open to new investment and have everything they need to accommodate new companies. For example, Bulgaria and Romania have qualified workers; in addition, the legislation and requirements for doing business here are much more flexible and simpler than in neighboring countries, including the Czech Republic. The exit of Great Britain from the European Union, as well as the active development of infrastructure, also opens prospects for these countries.
Romania deserves special attention, where the increase in industrial and logistics activity is already noticeable, and the costs of operations in this country are almost comparable with those in China.
In addition to industrial and logistics companies, Southeast Europe is also interesting from an investment perspective. Last year the profitability of warehouse real estate in Romania and Bulgaria was 8-10%, and in Hungary, the Czech Republic and Slovakia, this figure was at 5-7%. For comparison, in Germany and France the profitability is in the range of 4.5%. If we compare wages, in Serbia it is 3 times less than in the Czech Republic, and 2 times less than in Romania and Bulgaria. Such wages are attractive for foreign investors from more developed countries, where the rates are much higher.