GERMANY - Invesco Real Estate has invested in a logistics development in Poland on behalf of pension fund BVK, and says there is growing interest in the market from other German institutional investors.

The iii-BVK Europa-Immobilien-Spezialfonds, managed by Invesco since 2000 for German pensionskasse BVK, has invested approximately €37m in a 57,000 square metre logistics development in Gliwice, Poland.

The property will be used as a central hub by retailer Tesco Polska and developed by Panattoni Europe, and is due for completion in October 2010.

Kim Politzer, director of European research at Invesco, said there are a growing number of German institutional investors  who are interested in such deals.

"Local investors are starting to look to acquire things again, and we've seen the German funds become quite active in the Czech Republic and Warsaw," said Politzer.

German open-fund manager Union Investment recently acquired the Horizon Plaza office complex in Warsaw for approximately €102m, representing the largest commercial real estate deal in Poland this year.

Yields in Poland have hardened by approximately 50 basis points over the past six months, following a peak of 7.5% in 2009.

"Investors realised the markets were priced out too far and have started to bid quite aggressively," Politzer added.

Invesco is positive on the Polish market from an economic perspective - GPD growth is forecast at 4% in 2010 - but also in relation to its greater maturity and transparency over other central and eastern European markets.

"In general, investors are starting to become a bit more comfortable with these markets. I think they've realised there is a clear difference between Poland and the Czech Republic, and Romania and Bulgaria and Russia," said Politzer.

She added that despite the yield compression, deals in Poland such as the Tesco logistics acquisitions can be achieved with attractive spreads over similar deals in Western Europe markets.

"If you tried to buy a logistics unit in the UK with a 10-year lease to Tesco, you would be paying a 6.5%," she argued.

"But it is effectively the same covenant and the same quality build in a good logistics location and you are getting at least 300bps better on the yield for it. It is a real opportunity compared to some of the pricing in Western Europe."

Politzer said it can be difficult for investors to gain access to logistics in Poland since the sector is controlled by a handful of developers, such as Panattoni.

Invesco Real Estate and Panattoni Europe have an existing relationship with construction projects for logistics properties in Europe.

Another recent project of this partnership is 20,000 square metre extension to a logistics warehouse in Orléans, France, also owned by BVK, worth €10.5m.

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