Demand for real estate investments will stay high in Central and European Europe, but it has reached a peak and it’s unlikely to climb to greater heights, Mark Robinson, CEE Research Specialist, Colliers International, told Real Estate Day.
‘We see demand staying high, at the €12-14 bn mark, but reaching a plateau and staying there,’ he said. ‘We have reached a high point’.
On the positive side, the market is supported by strong economic fundamentals. ‘The feeling in 2019 is that the economies in CEE in this cycle are very resilient, employment is high and a lot of demand is being led by consumption, which supports investor sentiment and rental growth.’
On the negative side, there is geopolitical uncertainty and economic slowdown close to home. ‘There is the possibility of a technical recession in Germany, which will affect the region. Poland will be less hit, but Czech Republic will be affected,’ Robinson said. China’s slowdown is also a risk, as it will have a negative impact on the world economy.
‘The outlook is mixed, but we will still see high investment volumes,’ he said. ‘Investors are doing their homework, doing due diligence and looking at assets in great depth. We are at high altitudes in terms of investor sentiment, so we have to be careful.’
The economic underpinning of the market will stay solid this year, but ‘the biggest risk is political rather than economic,’ Robinson said. ‘We believe interest rates will stay at zero this year, and of course the underpin of a zero interest rate is crucial for funding investments in CEE, as funding is in euros.’
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