One of the most important questions among the participants of CEE Property Forum 2022 in Vienna was “Is it still safe to invest in real estate located in Central and Eastern Europe?”. The answer is positive. It is still safe, though not everywhere.
During the discussion panel titled “Investments without borders – The most active local dealmakers of 2022”, the moderator - Mark Richardson, Director, Head of Industrial and Investment Services at Colliers – pointed out that the market share of local investors is continuing to grow. “Last year it was all about Hungarian investors coming into Central Europe, this year seems to belong to Czech players, It looks like 20% of all investments in Central Europe were Czech money, domicile funds or investors”, said Richardson.
So who will keep the investors` interest in these turbulent times? Romania and Poland were mentioned most often. “Poland and Romania are coming out as winners, mainly because of the geopolitical situation. US military presence has been greatly strengthened in these countries, which is a huge plus for the region. But both of these countries are going to benefit from the nearshoring processes in the coming years, as they are natural choices for the companies relocating their businesses to more Western locations”, predicts Victor Constantinescu, Managing Partner, Romania & Co-Head of Real Estate at Kinstellar. His opinion was shared by Anca Damour, Board Member of ELI Parks: „For Romania, the economical forecast is quite good for 2022, we predict the growth of 3.9%. This shows us that there is room to grow. And this will naturally attract investors. We also have to keep in mind that difficult times are also creating new opportunities. For example, the conflict in Ukraine has completely redirected the logistical routes – for example, the port of Constanța is booming now. We have one of the best broadband infrastructures in the world, we have great ideas in the IT sector, and we have a very skilled workforce, who travel and work across Europe, which can come back into Romania if new opportunities arise. And we got a very stable and mature financing system, which invests in new businesses”, she commented.
Tomasz Buras, CEO and Head of Investment at Savills Poland believes that his country will remain untouched by the incoming slowdown: „Typically, during the change of cycles Poland was usually benefiting a lot. We have a lot of new real estate, very good quality buildings, leased on very good quality leases to international and local quality tenants. The investors` interest will stay here, there's no question about it. We tend to overestimate what we can do in a couple of weeks, but we underestimate how much can be done in the year. Yes, probably there will be lower activity by the end of this year, but hopefully, we'll be picking up in the spring. As Anca said, the pandemic and war have created a lot of positive effects, for example, a global change in how people look at the supply chains. How this can be disrupted if you have all your eggs in one basket in China. So now, global corporations are changing the way they produce and supply goods in the long term. And despite the global turbulences, we see an increase in foreign direct investment into the region”, stated Buras.
Eric Assimakopoulos, Managing Partner of Revetas Capital was of a similar opinion.”Ultimately, it goes down to the fundamentals. And if you look at the fundamentals for Central Europe, like GDP growth, universities, cities where the blue chip companies are coming in, new highways across the region that didn't exist five years ago, these fundamentals speak for themselves”, he said.
What about the risks? Which countries are facing bigger problems? Because of political reasons, some are pointing to Hungary. Krisztián Hornok, Transaction Director at Indotek Group said: “Nobody knows where the situation in Hungary is taking us, it is very new to all market players. For my country, it's obviously a big challenge, all the growth is frozen now. The forint is weakened, compared to the euro and dollar. As a Hungarian, I'm pretty much hoping that this will be resolved very soon and constructively. However, Poland, Romania, Czech Republic and others can benefit from it – simply because they are not in our position”.
Michal Šperka, Head of Finance at ČMN also stressed, that the incoming market slowdown may have a significant impact on the whole region. „From our point of view, assets and property management are the keys. I always say that if there's only one thing, which is worse than having a building – it is having a building, which is occupied by tenants who are not able to pay rent and service charges. I repeat - property management and taking care of the portfolio will be key topics in the next 12 to 24 months. Companies that used to operate on very low margins will probably face some problems with their liquidity. And it may be an issue”, said Šperka.
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