Central and Eastern European real estate markets are becoming ever more liquid and attracting more capital from all over the world, delegates heard at Real Asset Media’s Outlook 2020 – Europe & CEE investment briefing, which was held at Colliers International’s Warsaw office earlier this month.
‘We are seeing an all-time record diverse investor capital base’, said Mark Richardson, Director of Investment Services, Poland, Colliers International, in his keynote address. ‘Relative to Western Europe, CEE still offers double the rate of economic growth and more attractive returns and we believe there is still a lot of capital seeking to invest’.
Asian investors will continue to come but ‘there will be more diversity’ as to their provenance – not just South Koreans but more capital from China, Singapore, Malaysia and other countries.
American investors, who recently had been net sellers are now coming back, he said: ‘We expect more US private equity companies to be prevalent in the market this year, chasing large platform deals, portfolio deals and large lot sizes. It will be interesting to see how their strategies play out if they have constraints in terms of product’.
The only obstacle to growth is lack of assets to buy.
There is a lot of pent-up demand, Richardson said: ‘Transactions reached €14 bln last year, but we believe there is potentially up to €70 bln of uncommitted frustrated capital. Owners are reluctant to sell without the opportunity for redeploying capital’.
Product availability is the biggest negative in a positive picture. ‘Occupier markets for office and industrial are strong and there are good development pipelines,’ he said. ‘More liquidity could return to the retail sector across Poland and the wider region’.
E-commerce can be seen as a potential risk for retail, but it’s also an opportunity for logistics. Amazon, which is servicing the German market from Poland, is just one of many companies that have shown that ‘there is a strong case for corporates to base their business in CEE’.
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