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The City - April 2015

Building value

Real estate is a business for the patient. Developing buildings is a long-term project and building value of a company in this industry – even longer. In principle, it is the primary goal of investment funds, but not only. Every enterprise has to face this challenge. This issue of The City touches upon a few threads related to this topic.

New challenges are ahead of owners of office buildings. On the one hand, they have to face a difficult market situation; on the other, experienced and educated tenants. It does not get easier for the retail market, which faces the lack of tenants and the pressure of e-commerce. The footfall in shopping centres has been dropping for a few years; therefore, the managers will do everything to make loyal customers stay longer. This is why food courts are being modernised and additional leisure zones are being created.

Developers of warehouse developments are going through tough times as well. The currently offered rates are usually much lower than the market average and call the profitability of those projects into question. The downward pressure exerted by developers looking for short-term profits forces the players with long-term strategy to adapt their rents to this low level.

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