What they're talking about at Expo Real

Due to prime product becoming increasingly scarce and continued yield compression in many mature markets, investors will go to this year’s Expo Real in search of alternative investment opportunities. Such asset categories as PRS (Private Rented Sector) as well as student and senior housing are being increasingly targeted worldwide. In Poland, where the three traditional sectors continue to dominate the real estate market, industrial assets could become an attractive alternative for global capital.

I believe Polish industrial properties will be the hottest topic at this year’s Expo Real trade fair in Munich. There are strong arguments for investing in logistics assets in Poland, including road improvements, double-digit growth in e-commerce over recent years and the buoyant labour market. The spectrum of investors targeting Polish warehouses has recently been widened with buyers from countries such as Korea and Singapore. Poland’s recent upgrade to the status of a developed market on the FTSE Russell index is likely to result in more investment funds coming to the country. Poland is the first country in almost a decade to have made it and is now ranked alongside Germany and the United States, which is a previously unimaginable success.

Although industrial asset prices tend to be lower than those of office or retail, more record-breaking transactions are likely in the near future, propelled by investors’ strong appetite for portfolio deals. This is confirmed by an Asian fund’s acquisition of Prologis’ international portfolio, which includes projects in Poland, for more than USD 1 bln in total worldwide, which was announced literally a few days ago.

The gap between industrial supply and investor demand is also likely to lead to an upswing in forward funding where an investment fund finances the development pipeline, taking the development risk but letting the developer complete and frequently commercialise the project. Under current market conditions, this option benefits both parties, particularly when it is a long-term partnership.