One of the fastest growing segments of Slovakia’s property market in the last three years have been logistics.
While until 2002 the only capacities were represented by low quality space in areas such as the old industrial zones of Bratislava, change came with the industrial growth in 2003 and the EU entry a year later.
Tens of thousands of square metres of new warehouses are springing up each year to meet growing demand. Main locations are along the D1 highway from Bratislava (direction Trnava) and in the proximity of Bratislava airport. Increasingly locations around Zilina are becoming important due to the KIA automotive plant.
While until recently most warehouses were built for a specific client, more and more facilities are now starting to be built speculatively as a rent-out model – with variable interiors to accomodate needs of future tenants.
The # 1 logistics destination is the area around Senec, near Bratislava and the D1 highway. Following last two years’ projects by developers Parkridge (90,000 m2 of rentable area), IPEC & UBM (Senec Logistics Center, 45,000 m2), the newest multipurpose park Senec Cargo Center will also deliver office and residential space. The 250 million euro investment will be developed by Slovak IPEC Group.
Another Senec area project, Bratislava Logistics Park (by the Karimpol Group) offers 65,000 m2 of rentable area that can be increased by a further 300,000 m2 in the future.
Proximity of Bratislava, excellent highway access and availability of modern high quality facilities at the price of low standard, old warehouses in Bratislava have made Senec into Slovakia’s logistics hotspot.
Near Lozorno, 12 km NW of the capital and next to D2 highway, the Westpoint D2 Distribution Park is under construction. The investor (Merril Lynch) is putting 37 million euro into the project, to be built in four stages over three years.
The largest Slovak real estate transaction also involved logistics-industrial parks. 300,000 m2 of J&T’s 4 logistics parks (as well as the office block Westend Tower and options on future industrial sites) were bought by the french AXA Group for 250 million euro. The four parks include the Trnava Suppliers’ Park for PSA Peugeot-Citroen (Slovakia’s largest with 180,000 m2; 108 million euro investment), the DNV Logistics Park (Devinska Nova Ves, north Bratislava) next to the VW car plant and industrial parks in Nitra and Dubnica nad Vahom.
HB Reavis, one of Slovakia’s largest developers, stays with speculative projects. After its successful multipurpose Raca Logistics Centre in Bratislava’s Raca area (BA III; 66,000 m2 of rentable storage, light manufacturing and office area) the company is building the 36,000 m2 Svaty Jur Logistics Park, 6 km north-east of the capital.
J&T, IPEC and HB Reavis are Slovakia’s largest commercial developers, accounting for most of the country’s industrial developments (in some cases in joint-venture with a foreign partner).
While most logistics sites are concentrated around Bratislava, the city itself also offers two areas popular with this segment. The already mentioned Raca Logistics Park benefits from its good connectivity to the highway. The other location, Kopcianska street in Petrzalka (BA V) – as one of the city’s least attractive locations unsuitable for any other segment of the real estate market – has been used for warehouse facilities thanks to its excellent access to Austria.
Rents for warehouses in western Slovakia range from 3-5 euro/m2/month for highest quality space down to 1.5 euro/m2/month for older, less attractive facilities. Land prices in industrial zones in the Bratislava area are 30-100 euro/m2. High demand for land along the highway has resulted in fast price growth of parcels suitable for industrial development.
Although the logistics segment is mainly concentrated in western Slovakia (Bratislava, Trnava, Nitra, Trencin and increasingly also Zilina region), central and eastern Slovakia have also seen construction of several industrial parks, the most notable being the eastern parks in Kechnec, Michalovce, Humenne and Strazske.
Slovakia deems an industrial park to be a project of regional or national importance that involves unified lands of at least 10 hectares size, with legally clear ownership and provided with engineering networks and transport infrastructure.
Main problems are the difficulty of buying up land (which in Slovakia is split into very small parcels, meaning investors have to deal with hundreds and even thousands of individual owners – provided they can be identified in the first place) and, outside western Slovakia, also lacking infrastructure.
Creation of industrial parks can be initiated by municipality, region, or private company/investor. State (Ministry of Economy) and EU (Structural Funds) aid for building infrastructure can only be awarded to municipalities. In such cases a traditional model usually involves 70% from the EU, 25% from the Min of Economy and 5% from the municipality itself.
FUTURE
Strategic location in the centre of Europe, proximity to the massive markets of Ukraine and Russia, high industrial growth based mainly on the automotive sector, skilled and educated yet low cost workforce are the main advantages that will ensure further expansion of the logistics segment in Slovakia.
In the long term, an area that should see surging demand is the zone near the border with Ukraine. With the Shengen agreement this eastern border of the EU will be increasingly attractive for logistics and distribution facilities. The severe infrastructure problems (the highway will only come to the eastern city of Kosice in 10-14 years) will be partially eased by an opportunity to access the European transport network through Hungarian motorways in the south-east.
Therefore, logistics development is a chance for this region that, due to high unemployment and extremely low purchasing power is not going to see much activity in any of the other real estate segments for at least the next decade.
Article provided by: http://www.slovakiainvestmentproperty.com