‘Investors like the CEE story’
Asian, European and domestic investment has replaced US and South African capital in CEE, delegates heard at Real Asset Media’s CEE Investment Briefing, which was held at Colliers International’s London offices last week.
‘Investors like the CEE story’, Kevin Turpin, Regional Director of Research, CEE, Colliers International, said in his keynote address.
By the end of Q3 investments had reached the €9 mln mark, with the pace picking up towards the second half of the year. ‘We are optimistic that we will come close to the €13 bln mark like last year,’ he said. ‘The issue is product availability rather than investor appetite’.
Poland continues to dominate the region, accounting for about 50% of total investment volumes, followed by the Czech Republic, Hungary and then Romania, Bulgaria and Slovakia.
Offices remain a positive story, with 60% of investment going into the sector and strong interest from international investors.
Foreign capital is still pouring in, but its provenance is changing. Historically a lot of capital came from the UK, Germany, Austria and other European players and the US.
Europeans are even more active, going up from 19% of total volumes last year to 28% this year, while Americans have been net sellers, shrinking from 19% to 6% and South African investment has halved to 7%.
Asian capital has stepped in to replace them, shooting up from 6% to 16% this year, said Turpin: ‘We’ve seen Singaporean money, Malaysian pension money and quite a bit of South Korean capital in the last 12 to 18 months, so quite a diverse group’.
The really significant development in the last few years has been the rise in domestic CEE cross-border investment, which has increased from 23% to 25% in 2019.
‘Most importantly, we have seen capital from Czech Republic and Hungary investing into their own markets but also in other countries in the region,’ he said. ‘Poland doesn’t have a REIT structure yet, but if things change we’ll see more money coming from there as well’.
The macro picture looks healthy, but the slowdown in Germany is a bit of concern, said Turpin, because most of the economies in the region are closely linked to their neighbour from a manufacturing and a demand perspective.
However, ‘CEE economies have diversified quite considerably and we believe they are quite robust now’, Turpin said. ‘We see rents pushing upwards, development pipelines are relatively strong but demand outstrips supply so our view on the region is positive’.
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