Logistics & Industrial the most resilient asset class in CEE

Industrial & Logistics is proving to be the most resilient asset class as it continues to attract investments even during the current market downturn, delegates heard at Real Asset Media’s CEE Investment briefing, which took place recently in Warsaw.

“Logistics has a strong long-term future in Poland and the Czech Republic and now it’s absolutely the right time to buy,” said Piotr Goździewicz, head of transactions CEE, Cromwell Property Group. “I think the window of opportunity will still be open for the next 12 months and then things could change. If financing cost become more manageable, then pricing will become more aggressive.”

Investors with cash or able to access good financing terms should use this transition time to make acquisitions in a sector that has already proved its worth. Poland has been second in Europe in terms of occupier demand for four consecutive years, with transaction volumes comparable to those of Western European countries.

Earlier this year NREP invested €200 million to acquire an 80% stake in 7R, one of the largest logistics developers in Poland, with a portfolio of 1.8 million sq m and a pipeline of over 2.3 million sq m. It was one of the very few big deals done in 2023.

“It has been a win/win deal,” said Søren Rodian Olsen, MD, Logicenters Poland, NREP. “7R were looking for a long-term strategic shareholder and they found one in us, and we were looking for a strong sustainable investment in the logistics sector in Poland and had kissed many frogs before we found them. So I think this is a match made in real estate heaven.”

NREP decided it was strategic for them to have a presence in the Polish logistics market, bring to the table their ESG capabilities from the Nordics and be able to build on 7R’s knowledge and experience on the ground.

“We liked the asset class, we liked the business, we liked the product and we liked the people, and it doesn’t happen very often,” said Rodian Olsen. “The deal was helped by the fact that pricing was on our side.”

The reconfiguration of supply chains is also helping the sector. “We’re seeing a number of so-called friend-shoring transactions, as companies move closer to Western borders,” said Katarzyna Kotkowska, associate director, investment, Central Europe, Segro

Poland is dealing with the same geopolitical, economic and financial issues that are slowing the market down in other European countries, from the high cost of debt to a lack of liquidity, but the macro fundamentals of the logistics sector are strong and the size of the market gives it an advantage.

“Logistics really is the name of the game in CEE and it will continue to be on investors’ agenda, including our own,” said Rodian Olsen. “I believe e-commerce, which has slumped recently, will become one of the biggest drivers of demand in Polish logistics in two or three years’ time.”