According to speakers of Bratislava Property Forum 2023, many investors are in the price discovery phase, waiting to see what’s next. Nevertheless, during the debate, participants mentioned many inspiring possibilities that could drive investors to the Slovak market.
There are a lot of question marks affecting investment decisions in these challenging times. There is not only a crisis in geopolitics right now, but also a crisis in macroeconomics, interest rates and energetics. And the question is how this situation is affecting the way investors perceive Slovakia and the CEE region and how they will deal with it in the nearest future, said Ignacio Gomez, Associate, Investment Services at Colliers, the moderator of the investment panel at Bratislava Property Forum. According to him, the last year in Slovakia was a record one with a total investment volume of over €1 billion, about 40-45% above the average of around €600 million.
According to Tomáš Jurdák, Real Estate Partner at MiddleCap Group, it seems that Central Europe is becoming less attractive for international investors as they are achieving similar returns on more mature markets. They consider Hungary a very complicated market with political risk. They also find the Czech and Slovak markets not so attractive and the only market that seems attractive from a global perspective is Poland, he added.
Investors in Slovakia, however, have a great advantage compared to the Czech Republic as they can easily invest in euros, not having to worry about exchange rate losses, reminded Martin Šmigura, Investment Director of WOOD & Company.
Investors are looking for certainties in the market, especially banks and others with a conservative and cautious approach. For the banks, it is best to finance land in a good location and with a strong sponsor. Such investments are then considered "supersafe" for the bank, especially if they lend a maximum of 50 percent, confirms Zuzana Kanalová, Head of Real Estate at VÚB Bank. According to her, Bratislava and possibly the centres of other large cities in Slovakia are among the most interesting locations. These include the so-called “big three” - Košice, Nitra, and Bánská Štiavnica.
On the other hand, companies like Mitiska REIM are looking for completely different certainties and conditions for their investors. Nowadays, retail parks and urban logistics, the so-called “last mile logistics” in the vicinity of the largest cities, provide the best opportunities, says Tomáš Cifra, Partner and Managing Director for Central & Eastern Europe at Mitiska REIM. He also sees great potential in the redevelopment of big hypermarkets into a retail parks. This is now much more attractive for many customers after the pandemic as they prefer to go to smaller shops than to hypermarkets.
Despite the various crises these days, Hannes Wimmer, Executive Director, Loan Syndication, Erste Group Bank AG doesn't see the trust issues that were there before in the last financial crisis, but he clearly sees a slowdown in transactions. The only thing that will drive the market this year, according to him, are just rollovers of existing stocks as the market is slowly filtering through the price-finding phase.
Another interesting topic that many have intensively focused on recently is ESG, points out Klemen Fajmut, Business Development Manager at Imagine. According to him, ESG is an extremely topical issue for Generation Z, which will also become one of the largest workforces in the coming years. So, everyone is addressing it and so are investors. Thus, in recent years he has not seen any serious investor in a major project who has not thought about this, who has not implemented it in one way or another. So, the developers are already taking the concept of ESG into account in all new buildings everywhere and at all times. But we still must not forget that the existing stock of outdated, non-ESG-compliant assets is huge, and it will stay with us for a long time, warns Klemen Fajmut.
