Central Asia is on the verge of a strong warehousing boom: what kind of investment is preferred

In some countries of Central Asia the rental rate for logistics real estate increases by 20% as a yearly average; the same trend is observed for the deficit, which varies depending on the region from 0.8 mln sq. m to 3 mln sq. m. The new doorway is opened for investors but what risks are expected outside?

Through the hundreds of years, Central Asia enjoyed the reputation as the most important cross-point of continental trade and logistics – it is sufficient to recall the Great Silk Road and other caravan routes. Today, the region has the chance to restore its past glory. Among the favorable factors, the experts highlight:

• surge in the volume of internet trading;

• enhanced demand, both domestic and external, for high-quality warehousing sites;

• reconfiguration of the logistics chains with the participation of the Russian companies.

However, on the way toward this goal, there are some intrinsic restraints. They include the high construction costs, lack of institutional stakeholders, weak engagement with the international logistics network, outdated infrastructure, and lag in standardization. Moreover, one may not disregard the risks associated with the socio-political (including the inter-ethnic) tensions. However, the benefits of these markets development exceed any side effects.