2017 was not the strongest year for Slovakia’s investment market but if all goes well we might see the previous record of €850 million being broken this year. Peter Nitschneider, Country Manager for Slovakia at JLL shared his expectations for the Slovak property investment market.
Peter Nitschneider chaired the senior CEE investor, developer and banker roundtable at Bratislava Property Forum 2018, co-organised by Property Forum and RICS.
Total investment volume in Slovakia for 2017 was recorded at €525 million, below JLL’s initial estimate. What are your projections for 2018?
We expect another strong year, with expected volume again above €500 million. If the situation on financial markets remains positive, we might break the record set in 2016 (€850 million). We see investor’s activity in all sectors of the market. Due to the lack of the product in the industrial sector, retail and office properties will play the important roles.
How do you think the perception of Slovakia as an investment destination changed over the last two years?
The market is definitely more international and liquid. Hesitation is mostly coming from players entering the market. Established investors know the market already and are therefore keen to make new investments and benefit from the hesitation of others. Conditions on the market are in favour of those prepared, who can still buy cheaper than in other CEE countries.
Do you expect new investors to enter Slovakia within the next 12 months? Will the importance of local players and cross-CEE capital continue to increase?
We expect increased activity of local players supported by the activity of new entries. Platform deals might be back on track in 2018. Variety of investors will make the market even more liquid, as we can expect deals with different tickets transacted.
What is the most sought-after asset class right now?
All class prime product is the one most demanded. During the last 24 months, the industrial sector has taken the lead, almost 45% of the volume transacted was allocated into logistics and production properties. The retail sector will be rediscovered in 2018, as some prime products are expected to test the market. Correction on the market can lead to the historically low yields achieved on the Slovak investment market.
How have financing conditions changed in the last 12 months? Do you expect interest rates to rise anytime soon?
Due to the policy of ECB, all commercial banks are forced to lend. We see financing of speculative developments to be back on track. In order to be competitive, banks are lowering financing requirements, even though NBS is trying to restrict these conditions (at least in loans provided to the public).We might face a new situation in interest rates at the end of this year, potentially at the beginning of next year. We can expect slow and steady growth as we have seen in the US markets. Those waiting for refinancing might come short after summer.
