Low rate of return hinders investment in warehouse real estate

Низкая доходность сдерживает инвестиции в складскую недвижимость

Despite the great potential for development of warehouse real estate in Ukraine, investors are reluctant to invest in the commercial real estate sector because of low profitability. This was announced by the head of the Department of capital markets Kushman & Wakefield Volodymyr Mysak during the VII National conference of steel construction market, organized by the Ukrainian center for steel construction in Kiev.

“The warehouse real estate has huge potential. But there are certain barriers. Investors in the warehousing real estate is not in a hurry to develop, because the yield and the margin is very low. You need to build a facility, the cost is approaching $ 500. per sq. MT. And the total cost of close to $ 550-600. per sq. m. And take you from 3.5 to 5%. 5% is already a very lucky tenant. Basic history of the regions is 4-4,5%,” said Mysak.

In conditions when the yield does not exceed 10%, investors choose other areas for investment. For example, the alternative is investments in debt securities Ukrainian government denominated in the dollar. Their yield is around 9-10,5% – said Mysak.

In General, the Ukrainian market of the warehouse real estate there is a very low vacancy rate, which leads to an increase in rental rates while reducing the rate of return.