Is the real estate market facing really tough times? And can some segments of it resist?
The only segment of the real estate market that managed to withstand the combination of higher interest rates, inflation, and high energy prices last year, was industrial real estate. “At the same time, to assume this segment is immune would be naive. Increased construction cost, yield shifts due to inflaction-driven rental rates and long-term high land prices brings significant challenges to underwriting and risk mitigation. Tenants in dire need of manufacturing or warehouse space are confronted with the market reality of higher rents. However, as this is an essential part of their business, they are trying to find savings elsewhere, for now” explains ARETE co-founder Robert Ides in a text for Wealth Magazín. The low vacancy rates within this segment, record construction volume, and ongoing demand, have so far made logistics and light construction assets the most resilient within all RE asset class allocations. https://lnkd.in/gCsEBnkq
The return of industry to Europe represents an important opportunity for less developed regions
The return of industry to Europe represents an important opportunity for less developed regions. It is a chance to reverse negative trends, such as the depopulation of border regions. Industry can provide attractive job opportunities that have disappeared with deindustrialization. “We are not talking about manual labor. These jobs will disappear within a few years thanks to automation and robotization. I mean positions with higher added value for people with technical education,” explains Lubor Svoboda, co-founder of ARETE, in a January article for the Slovak magazine TREND.sk. Thanks to global trends, investors and real estate funds sense an opportunity that may not be repeated. Moreover, if declining regions damaged by the departure of industry thrive, the whole economy will also benefit. “Our job is to find suitable investment opportunities or sites and land for new development,” Svoboda adds. We unlock for you the full article from TREND.sk, of which we have become an expert partner. https://lnkd.in/ebCQDZkt
Industrial building boom pulled up industrial fund yields
As a result of the pandemic and the war in Ukraine, industrial and logistics real estate is now perceived as a critical infrastructure of the state. In addition, thanks to high demand and low vacancies of around 1%, this segment of the real estate market can maintain its value even in times of crisis. “At the same time, there is a lot of potential for growth. Due to the energy crisis, lessors are forced to look for cost savings and focus on sustainability and energy efficiency in properties. Older industrial parks are being renovated and modernized,” says Lubor Svoboda, co-founder of ARETE. Thanks to their resistance to crises, industrial real estate can thus play a stabilizing role in an investment portfolio and become a suitable complement to shares or bonds. This is why we invest in stable industrial real estate in Central Europe in our ARETE INDUSTRIAL fund. Over the years, we have built up a broad portfolio of premium tenants and industrial properties, which we continue to expand through acquisitions and our own development. Read more in the unlocked text from the Slovak TREND.sk, of which we were an associate partner. https://lnkd.in/e_nyqCTb
Industrial real estate is a new port of call for investors
The pandemic, supply chain crisis, and the war in Ukraine are reflected in the economy in terms of unprecedented inflation, rising debt, and interest rates unseen in the last 10 years. Meanwhile, the industrial real estate segment is reflecting this trend in increased construction costs, labor, and rising transportation and production costs. Nevertheless, demand for new industrial parks, halls, and logistics facilities is still unsatisfied even as both investors and tenants consider their investments and costs more carefully. Current market developments are still opportunities to be seized. “The development of modern technology and automation will be key. Technologically advanced companies need a background of educated and capable employees, who in our case also draw on the historical traditions of our countries. The Czech Republic and Slovakia are attractive locations, we just need to take advantage of this and create favorable and, above all, stable conditions for companies,” explains Robert Ides, co-founder of ARETE, in an interview with TREND.sk. The attached article is the first in a series of texts on alternative investing, of which we have become a partner. https://lnkd.in/ecRbWx_Q
ARETE Group’s third fund completed the construction of a new hall within the ARETE Park Rokycany I industrial park
ARETE Group’s third fund completed the construction of a new hall within the ARETE Park Rokycany I industrial park. The long-term tenant of the facility will be Raben Logistics Czech s.r.o., one of the world’s leading players in the logistics market. The total value of the development is 7 million EUR (approximately 165 million CZK). The facility will be occupied by Raben Logistics Czech, a company that has been operating in the Czech market for fifteen years and offers comprehensive and customized logistics services. The new facility, with a leasable area of more than 6,700 m2, boasts technical specifications that meet the highest requirements of environmental certifications. The entire facility is being built with the ARETE Group’s ESG strategy in mind. At the same time, the newly completed warehouse is the first building within the ARETE Industrial portfolio to be completely warmed by heat pumps. “Our fund is strengthening the share of new logistics and warehouse properties in the portfolio. We are pleased that we have managed to complete the construction of a new modern hall. For this, we must thank our development team, who have worked hard and demonstrated their high level of expertise over the last few months. At the same time, ARETE Park Rokycany I is attractively located right next to the D5 highway, which is an important transportation route connecting Prague and Germany. The proximity to the city of Rokycany also means a sufficient pool of skilled workforce. Soon, we will start further construction within this industrial park. When fully completed, the industrial park will offer tenants an area of more than 20,000 square meters,” said Robert Ides, co-founder of the ARETE Group. “As a tenant, we appreciate the high level of expertise demonstrated by the ARETE Group development team in recent months. The vision with which ARETE intends to continue to manage the property and develop the site was a key factor in our decision to build a modern transshipment facility in Rokycany, which will significantly speed up the connection between Central Europe and Germany,” added George King, Lease & Facility Manager at Raben Logistics Czech s.r.o.
Invest In A Shopping Mall From 20 Euros?
Our colleague Dr. Josef Vojta was a guest of Lenka Buchláková in the programme Ekonomika+ on Televízia TA3. The following topics were discussed: why start investing, basic differences in investing in an investment apartment and an investment fund, what to pay attention to when choosing an investment fund, investing in real estate versus investing in shares. You can watch the full session here: https://www.ta3.com/relacia/27628/investovat-do-nakupneho-centra-od-20-eur
Industrial real estate operates in all phases of the business cycle
Industrial real estate can bring stability to a portfolio as well as interesting gains during all phases of the business cycle. It is a unique sector that grows as one of the fastest in a conjuncture and at the same time can withstand recession very well. Additionally, it is the real estate segment that is driving the new green building industry.More in the text of our co-founder Lubor Svoboda for Wealth Magazín https://lnkd.in/e2ccrKDf
New development in ARETE Park Rokycany 2
The third fund of the ARETE group has started the construction of a modern hall within ARETE Park Rokycany 2 industrial park. The investment will reach a total amount of 40 million euros. This is equivalent to just under one billion Czech crowns. The long-term tenant will be the Duvenbeck Group, which is an international active, full-service logistics provider. ARETE group’s third fund focused on attractive and stable industrial and logistics assets in the Central and Eastern Europe region has started construction of a modern logistics hall within ARETE Park Rokycany 2. The facility is planned to be completed within one year and the Duvenbeck Group will become its long-term tenant. The complex will offer nearly 30,000 square meters of modern warehouse and office space. The project will also comply with ESG standards in line with ARETE group’s strategy. The tenant will benefit from the strategic location of the facility, which is close to the D5 highway. “The launch of construction at ARETE Park Rokycany 2 is an important step towards building a stable portfolio for our third fund ARETE INDUSTRIAL. The complex is attractive for logistics companies due to its close proximity to the D5 motorway, which is the main highway linking the Czech Republic to Germany. Thanks to our own team handling the entire development process, we can be more flexible and can meet all the requirements of the tenant. We greatly appreciate the fact that the long-term tenant will be a reputable logistics service provider Duvenbeck. A group with more than 90 years of tradition, annual turnover of more than EUR 920 million, the best D&B Rating and currently more than 6,000 employees working at over 35 locations in 8 European countries,” said Lubor Svoboda, co-founder of the ARETE group, on the start of construction. The Czech branch of Duvenbeck was founded in 1996. The current Managing Director Oliver Röhl has been with the company since the beginning and has held the position of Managing Director himself since 2004. “For the Duvenbeck Group, this is a strategic project that will be one of the most important in the Central European region. We are delighted that a fund from the ARETE group is the developer and owner of the industrial park. We appreciate the high expertise of the entire ARETE group team, which was able to prepare a project that met all our requirements in a relatively short time. The excellent location of the park fits precisely into the network of key European warehousing and distribution centers of the group,” said Oliver Röhl, Managing director Duvenbeck Czech Republic.
Investing Not Only For The Top 10,000
Our colleague Dr. Josef Vojta was yesterday a guest of Lenka Buchláková from Televízia TA3 in the show Investujeme. “It is important to see the current socioeconomic developments over a long-term time horizon of five years or more. Currently, we often talk about topics that are not beneficial to investing, but this time will soon be over and we will hopefully be able to discuss what investment instrument is most suitable to choose,” said Josef Vojta in the debate. Other topics were also discussed: Why invest in real estate funds. What determines the success of investments Self-sufficiency trends and deglobalization as an opportunity for investors Why investments that generate ongoing cash flow are better than for example investments in commodities You can watch the whole programme here: https://www.ta3.com/relacia/27114/slovaci-prichadzaju-rocne-o-stovky-eur-udia-by-mali-so-svojimi-usporami-pracovat-radi-financny-odbornik
Don’t be afraid of deglobalization, it’s an opportunity
The era of a global and connected world is slowly coming to an end. The political and economic trends set in motion by the 2008 crisis were reinforced by the pandemic and subsequent war in Ukraine. But while a more fragmented world economy scares some, the new world economic order can be an opportunity for investors. The phenomenon of deglobalization will have many implications for political and economic life around us. For example, the structure of national economies can be expected to change as the frequency of crises increases, supply chains become destabilized, and the quest for decarbonization and self-sufficiency is pursued. We can also expect continued dissatisfaction with the results of the globalization approach in developed countries. The consequence? The return of protectionism, as a result of the promotion of national interests and the preference for trade between countries in the developed, Western world. All the indications so far are that the Western world has learned its lesson and the totalitarian or dictatorial countries are gradually falling by the wayside. These are all factors that investors today should consider when constructing their portfolios. How specifically? Deglobalization will bring increased pressure on companies and their operations. It is increasingly difficult to generate margins and profits. Today’s realities are rising labor and energy costs, higher interest rates, and the ever accelerating need to invest in new technologies. Large-scale changes in the distribution and supply chain bring with them additional, induced costs. However, deglobalization brings a crucial, positive element in the form of targeting local economic activity. The need to rebuild at least partial self-sufficiency in a range of sectors is leading to a renaissance of industries that have been driven out of Europe and into Asia. The current negative sentiment on the stock markets has washed away the returns of traditional portfolios composed of stocks and bonds. The way out for investors is to include alternative investments in their portfolios. For example, real estate funds may be one interesting way to achieve a higher degree of diversification, as they have a long-established low correlation with stocks and bonds. It can already be confirmed, even in Central Europe, that if individual investors have gone in this direction, they have been able to defy the decline in returns on traditional portfolios and keep their portfolio returns in the black in 2022. Indeed, some real estate funds, mainly focused on industrial property, have achieved annualized appreciation above inflation. Investing in territories that the investor knows, in sectors that they consider promising, and in asset classes that they believe are the building blocks of a portfolio. In terms of specific sectors to invest in as part of a portfolio reallocation, these can be relatively well associated with the manifestations of deglobalization. Artificial intelligence, automation, and robotics, for example, are the remedy for the declining number of people of working age and the generally rising cost of labor. The best example of this is their gradual deployment in factories, warehouses and logistics centers across the Western world. Renewable energy, recycling, and decarbonization companies are other interesting investments today. The greening of industry in Europe is unstoppable given the political pressure and legislation already in place. At the same time, with an eye to the future, it represents an opportunity for investors to value their money. Decarbonization means, among other things, the return of industry to Europe and the drive for greater economic self-sufficiency in Europe. During the pandemic, we saw with the shortage of masks and other medical devices that it does not pay to rely on unstable global supply chains. So today there is a drive to bring strategic industries ‘back home’. Investors then have the chance to invest in, for example, private equity funds focusing on progressive industries. Or they can choose less risky funds investing in industrial real estate. However, they should always check the fund manager’s track record and success, the assets, and strategy of the fund, how value is added, the risks involved, whether the fund invests within the EU, and in what specific part of the EU. All this plays a significant role. Long-term trends, combined with the one-off negative circumstances of pandemics and war, have made industrial and logistics parks a critical infrastructure for countries, and interest in these properties has risen sharply in conjunction with deglobalization trends. Today, only about 1% of the available space for lease in industrial parks in the Czech Republic is available and the interest in new leases has not yet cooled. This keeps the attractiveness of industrial real estate as an investment asset at a high level. Through the construction of modern industrial parks, real estate funds are preparing the ground for the gradual return of key economic sectors to our region. And investors can participate immediately. https://wmag.cz/nebojte-se-deglobalizace-je-to-prilezitost/
