The number of foreign investors that will appear in Slovakia depends on several key factors like the stability of the country, the availability and price of labour, and the cost of utilities and only then by the real estate market’s specifications, said Martin Varačka, Partner at Space Brokers SK in an interview to the Property Forum.
Primarily your company deals with industrial and office real estate. How do you see the further development of this segment?
Whilst the office market in Slovakia will experience a limited supply of new projects in the coming year and we expect tenants to negotiate their terms and improve their premises to address the impacts of Covid; the industrial market addressed the increased cost of financing and cautiously phased new space deliveries to keep the vacancy rate low. This allowed developers to increase rental levels, however, tenants start to question these levels and many face operational issues.
So, you are not worried about the twilight of the office market, which is being talked about in connection with the American office market?
As I mentioned above, tenants will continue to attract employees back to the office, thus, the location, infrastructure and the office environment will continue to be the topics these days. Some of the tenants will accept the new order and allow for a home office but will adjust their current premises (reduction of footprint to increase the secondary vacancy).
Which locations in Slovakia are still waiting to be "discovered" by developers?
With foreign direct investments (FDIs) in the East of Slovakia, new locations can be established by developers. Some tenants search for city logistics/retail warehouse schemes whilst producers determine the location as per the HR availability and cost.
To what extent do local investors and foreign investors participate in transactions in the Slovak industrial real estate market?
As for the A-class parks, the majority of the take up is by “local” investors. Foreign investors tend to search for built-to-own facilities (especially with current rents and interest rates) but there were several ones who accommodated their operation in multi-tenant rental solutions (Siemens in Panattoni Kosice, Bosch at CTP Presov South).
When do you think more foreign investors can be expected to come to Slovakia? And why are there not so many here yet?
In the past decade, Slovakia competed mostly with Poland and with Hungary. The future inflow of FDIs will be determined by the political stability of the country, availability and cost of labour, and cost of utilities and only then by the real estate solutions.
I know that you also have a thorough knowledge of the Slovak brownfield market. Which brownfields are the most numerous in Slovakia and what or where is their hidden potential?
Former manufacturing or production brownfields offer in many cases excellent locations, but we recommend considering their use also from a mid-to-long-term perspective. What can quickly turn into successful industrial development can (at certain conditions like no environmental pollution, surroundings, etc.) allow the creation of more complex areas that will accelerate the overall development of the city and become a great place to live.
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