CTP Insights: CEE – A Business-Smart Region

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Central and Eastern Europe (CEE) is becoming an increasingly attractive destination for industrial and logistics investment. CTP Group, the region’s largest developer, has released a new research report titled ‘CEE: A Business-Smart Region’ that analyzes a range of factors contributing to CEE’s attractiveness as an investment location.

 

The report identifies five key drivers of growth that will support the continued demand for industrial and logistics space in the region through the end of the decade. In this article, we delve into these key drivers and explore how they are fueling CEE’s growth as a business hub.

 

1.     Skilled Human Capital

One of the main drivers of growth in the industrial and logistics sector in Central and Eastern Europe is the availability of skilled human capital. The region has a highly-educated workforce and strong technical expertise. Poland, the largest CEE country, has over 1.2 million students enrolled in higher education, producing a significant talent pool of skilled workers. As a result, the region has become an attractive destination for foreign investors. Furthermore, the proximity of the region to Western Europe provides access to a large pool of skilled workers, making it a prime location for global companies looking to expand their operations.

 

2.     Connected Markets

The region’s connectivity to major European markets is another key driver of growth. CEE has a well-developed transportation infrastructure, including a network of highways, railways, and airports. This infrastructure enables companies in the region to transport goods easily to markets across Europe. For example, Poland has 6 international airports and 16 seaports, providing a gateway to global trade routes. The country also has an extensive rail network, connecting it to key markets in Europe.

 

3.     Diversifying and Expanding Economies

Central and Eastern Europe is a region of diversifying and expanding economies. As companies in the region continue to grow and expand, there is an increasing demand for modern industrial and logistics space. For example, Hungary’s economy is projected to grow by 4.8% in 2023, driven by strong exports and domestic demand. The country’s government has set a target of increasing the share of manufacturing in GDP to 30% by 2030, which will further drive demand for industrial and logistics space.

 

4.     Rising Domestic Consumption

Another driver of growth in the industrial and logistics sector in Central and Eastern Europe is the rising domestic consumption. As living standards continue to improve and disposable incomes increase, there is a growing demand for consumer goods. This has led to an increase in e-commerce and a need for efficient supply chain solutions. For instance, in Poland, the e-commerce market is expected to reach €18 billion by 2023, driving demand for modern logistics facilities.

 

5.     Strong Real Estate Fundamentals

Finally, the strong real estate fundamentals in the region are a key driver of growth. With a limited supply of modern industrial and logistics space, demand for premium facilities is high. In addition, the region’s favorable business environment and low costs of doing business have attracted a large number of investors. For example, the Czech Republic has a corporate tax rate of 19%, which is one of the lowest in the EU.

 

With these key drivers of growth in mind, CTP Group, which currently owns and manages a portfolio of over 6 million square meters of industrial and logistics space in CEE, aims to double in size by 2030. The company plans to achieve this by focusing on sustainable development and innovation, as well as by expanding its operations in key markets in the region.

 

In conclusion, CTP Group’s ambitious goal to double in size by 2030 is a testament to the continued growth and strength of the industrial and logistics sector in Central and Eastern Europe. The region’s skilled human capital, connected markets, diversifying and expanding economies, rising domestic consumption, and strong real estate fundamentals are the key drivers of this growth. As the region continues to attract more investment, we can expect to see further growth in the industrial and logistics sector in the years to come.


 

 

 

Bert Hesselink

Group Client Relationship Director

Bert is a well-respected real estate professional with almost 20 years of international experience in commercial real estate. In his role at CTP, Bert is responsible for translating rapidly changing tenants needs into business opportunities for developing better commercial spaces in sought after locations in CEE. Bert lectures at the MBA in Real Estate program at the University of Economics in Prague.

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