Logistics Assets: Winners of the Pandemic
Real estate investment funds are usually associated with office buildings, although it has recently become clear that it is not the only type of real estate worth investing in: as it turns out, assets in the logistics sector are the true winners of the pandemic.
The real estate portfolio of Diófa Asset Management, manager of the third largest property fund in Hungary, also includes three logistics parks, which have been of great importance to the investor in the past period.
A Pandemic Winner
Many expected COVID-19 to reverse the soaring rise of investment properties, but this prediction proved only partially true. Retail properties have suffered a clear drawback due to the pandemic since the discounts provided for tenants have set the limits on sales. Despite the rising adoption of working from home, office buildings have not come out on the losing side; however, there is one type of property asset that has undoubtedly come out of the epidemic victorious: logistics parks.
Logistics properties have performed beyond expectation over the past one and a half years. In addition to the record utilization of leasable areas, the willingness to invest in this type of real estate fund has also increased. Their success should not be so surprising, considering the reasons behind the constant rise in popularity of these assets: namely, the lockdowns due to COVID-19, which also increased e-commerce activity during this period. More and more people opted for online shopping than before, and most companies were forced to catch up with this trend. This significantly increased the utilization of logistics properties, allowing landlords to raise their prices, which were previously not exceptionally high for such parks. Furthermore, rising demand and prices will not be stopped by the end of the pandemic, according to real estate experts, with logistics parks continuing to play a major role in real estate investment funds in the coming years.
Diófa’s Logistics Assets
Diófa Asset Management is one of the most dynamically developing companies in the Hungarian asset management sector, providing asset management services to institutional and retail clients since its establishment in 2009 and premium asset management services since 2014. The institutional clientele of Diófa Asset Management consists primarily of prominent players in the fund and insurance markets, and in the case of retail investments, they offer investment opportunities in all major asset classes through investment certificates. It currently manages more than HUF 440 billion in assets for its institutional and retail clients.
Real estate investment is one of the cornerstones in the investment activities of Diófa Asset Management; the company currently manages investments in its real estate funds worth more than HUF 250 bln. Diófa also manages the third-largest domestic real estate fund, the Magyar Posta Takarék Real Estate Investment Fund, as well as one of the most successful institutional real estate funds, the Torony Real Estate Investment Fund.
The real estate portfolio of Diófa Asset Management, besides several exclusive Class “A” office buildings, includes three logistics parks, two of which are located in Budapest and one in the countryside. It is no coincidence that these properties are a vital part of the company’s real estate funds since the epidemic caused the logistics industry to soar, with the experts of Diófa being confident that this trend will continue in the future. The three logistic parks currently managed by Diófa Asset Management are:
- Innove Business Park: This property in District IX has an advantageous geographical location due to its proximity to the M5 motorway. The 19,000 sqm logistics park has a long-term contracted tenant base.
- South Pest Business Park: Located in a redeveloped modern industrial zone, this 43,000 sqm property is characterized by high demand due to its condition and location.
- Huncargo Logistics: The property is leased to Huncargo Holding, one of the important supply companies for the western Hungarian region. With an area of 14,100 sqm, the logistics park is located in Sopron.
Diófa Asset Management has found an outstanding partner in the field of real estate, as it manages its real estate portfolio in close strategic cooperation with Indotek Group, with the latter operating and leasing the properties, and Diófa managing the investment activities related to the assets.
This article was first published in the Budapest Business Journal print issue of July 30, 2021.
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