17:52 09.12.2021

Dragon Capital takes break from investing in new office real estate projects

2 min read
Dragon Capital takes break from investing in new office real estate projects

Dragon Capital investment company is implementing office real estate projects planned before the coronavirus crisis and is temporarily not considering investments in new projects, the founder and CEO of Dragon Capital investment company, Tomas Fiala, has said.

"We are implementing the projects that were planned before COVID. But we are also looking forward: in 2-3 years, perhaps the demand for offices will again increase ... We have now completed the construction of an office center in Lviv and we are not considering other offices," he said in an exclusive interview with the Interfax-Ukraine agency.

Fiala noted that office real estate has significantly lost in profitability due to the pandemic, although it was previously considered the most promising. At the same time, the head of Dragon Capital believes that over time the demand for offices will recover.

"I still think that people will return to work from the office, since work from home is not competitive. Employers will see the difference in labor productivity and return employees to offices," the investment banker explained.

In his opinion, in the case of a long period, working from home is relaxing.

"In the beginning, of course, everyone tensed and worked at home, because there was nowhere to go: cinemas, restaurants and shopping centers - everything was closed, so you sit at home and work. Now the situation is different," Fiala stated.

The head of Dragon Capital clarified that the vacancy of office centers in the Dragon Capital portfolio has stabilized at 11%, and the total area of office space in it is 204,000 square meters.

"Now there is a drawdown and some vacancy: we have it at the level of 11%, and in the new centers that we have built and commissioned recently, it is higher. Therefore, rental rates in offices, of course, have fallen over the past year and a half," he said.

According to the investment company, in the structure of income from real estate assets in 2020, some 37% fell on offices, while the share of warehouses was 30%, retail - 33%.

According to Fiala, the amount of investments in upgrades of office centers purchased by the company since 2018 totaled $ 26 million (excluding construction from scratch).

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