Which regional country presents the best opportunities for developers currently? Which market can be the best choice for investors? Which countries have a more challenging road ahead of them? These are the questions that regional real estate professionals tried to answer for us ahead of our CEE Property Forum 2015 conference in Vienna.
Which regional country presents the best opportunities for developers currently? Which market can be the best choice for investors? Which countries have a more challenging road ahead of them? These are the questions that regional real estate professionals tried to answer for us ahead of our CEE Property Forum 2015 conference in Vienna.
Jonathan Hallett
Managing Partner, Central Europe, Cushman & Wakefield
In offices, improvements in tenant demand were and likely will be offset by excessive supply on some markets, especially Warsaw. However, we expect the office sectors in Prague and Budapest to face healthy conditions going forward and therefore represent attractive investment products. Development in these cities will therefore represent a good proposition, benefitting from an improved demand and supply balance.
The industrial sector has undergone major consolidation and large global and local players now control significant portions of the markets in Central European countries. Romania, Hungary and Slovakia still offer attractively priced prime industrial properties and have room for development to match the growing demand of occupiers.
Retail is a particularly attractive sector in terms of investment and development, as a combination of market consolidation among retailers, stagnant retail sales and continued development created an environment of dropping rents, especially in the case of older and non-prime properties. This dynamic has now changed and a strong increase in retail sales and shopping centre turnovers will put upward pressure on rental levels. This creates a possibility to invest and refurbish existing shopping centres and develop new ones in selected cities.
Michaela Lashova MRICS
CEO, Forton, Alliance Partner of Cushman & Wakefield for Bulgaria and FYROM
The commercial property markets in South Eastern Europe are still young and there is a niche for new, modern developments. We expect in the near future SEE countries and Bulgaria in particular to become more attractive for project development especially in the office and industrial sectors. The increasing attractiveness of the region as a nearshoring destination for industries like BPO/IT/automotive and light manufacturing also encourages property investments.
Countries like Bulgaria and Romania, where the property markets are not saturated yet, will offer profitable opportunities for investors in a longer perspective. On those markets, investors can find core assets with attractive return rates. For SEE countries, better returns become a key advantage since the yield compression process is a fact in the CEE region.
SEE countries benefit from higher cap rates but the investors are still cautious about the lack of liquidity and exit strategies. However, an increasing investor interest in new acquisitions will lead to higher liquidity on these markets.
Managing Partner for Poland and EMEA Board Member, Colliers International
It is obvious that economic recovery is having an impact on the office markets in the region. According to data gathered by Colliers International, one of the most important factors driving the office market in the CEE region is the outsourcing and offshoring sector. We have observed very strong demand for office space from the O&O sector since 2010. This sector is having a significant impact on the office market in Poland, Slovakia, Romania, Hungry and Bulgaria.
In the Czech Republic, we observed above average levels of new supply in 2014 and 2015 causing vacancy levels to move to 17%. A similar problem has been noted in Warsaw. From the investment market perspective, there couldn’t be a better time for the CEE market to capture more investment from the increasing global pools of capital.
