The rising share of domestic investors has kept volumes high in CEE property markets in the last year and this trend will continue. The overall market outlook is quite optimistic as further declines are expected for inflation and construction costs, concluded panellists of Property Forum's recent online event.
Tim Wilkinson MRICS, Head of European Acquisitions, Indotek Group, who chaired the panel, pointed out that property investments will continue this year despite the volatile period. There are still risks in the market, but banks are in a better condition compared to 2008, while the quality property stock will prove its resilience, suggested Wilkinson.
Hadley Dean, Founder, MDC², mentioned that construction costs for warehouses have gone down by about 15% compared to last year but are still higher compared to two years ago. He added that people should be looking at price per sqm instead of yield for industrial projects. Dean explained that the 20% increase in rents for industrial in CEE for the past 24 months will offset a yield expansion.
Speaking about the office market, Anna Duchnowska, Managing Director – Investment Management, Europe, Invesco Real Estate, pointed out that vacancy rates in major European cities stand at around 10% compared to close to 30% in some major US cities. She added that offices in Europe account for roughly 30% of Invesco’s portfolio.
Hedwig Höfler, Head of Investment Management, CA Immo, pointed out that offices are still needed for a business to be sustainable, and you cannot fully replace it with a 'home office'. Höfler said she is optimistic for the near future as the pipeline of new developments is significant. She added that in Warsaw alone there were some five office towers completed during the pandemic and they have a high occupancy rate.
From a financing perspective, the market is similar to what we have seen 5-10 years ago, according to Dieter Knittel, Head of CEE, pbb Deutsche Pfandbriefbank. However, he pointed out that we will see the highest interest rates in a couple of months, after which they will start to fall as inflation dials down. Knittel went on to say that in the retail segment, the investor sentiment is still silent, but some transactions are coming back.
Silviu Pop, Director | CEE & Romania Research, Colliers, pointed out that in recent years we have seen a rising share of domestic capital being invested in CEE-based real estate assets. This has kept investment volumes up quite significantly. Speaking about the retail and industrial segments, Pop pointed out that consumption in CEE is still under Western Europe average and this should support new investments in the long term.
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