Investing in real estate in Central and Eastern Europe is still ‘a compelling story’ but lack of product is becoming an issue, delegates heard at Real Asset Media’s Outlook 2020 – Europe & CEE investment briefing, which took place in Budapest last week.
‘There is no shortage of capital looking for product, it is more a question of a shortage of product for that capital to find,’ said Kevin Turpin, Regional Director of Research, CEE, Colliers International.
Product availability is low because owners are holding on to their assets. They are reluctant to sell without the opportunity for redeploying capital, he said.
‘We are really in uncharted territory at the moment because we’ve had such a long growth period, especially the investment cycle coming up for ten years which is unheard of,’ Turpin said. ‘But most investors see the CEE region as very safe and secure’.
Despite some headwinds and slowing growth CEE economies are performing well and are more diverse than ever. ‘Headline rents are increasing in offices, occupier markets are strong for office and industrial, there are good development pipelines and we could see some liquidity return to the retail sector’, he said.
The retail sector is a perfect example of how the region performs differently from the rest of Europe.
‘Everyone’s heard the horror stories about retail, but actually in CEE sales are very positive,’ said Turpin. ‘Most people have a job, wages are increasing so they are going out and spending their money in shopping centres and retail parks’.
Not every shopping centre is a winner, but there are good news in some parts of the country. Online shopping has yet to make a big impact: the Czech Republic is the most active with internet sales at a 12/13% share of total sales, with Hungary at 7% and Poland at less than 5%, a long way from the over 20% level in the UK.
The Logistics and retail sectors ‘are held back by the fact that the best-performing assets are in the hands of a few big players who are long-term holders, so that product is not entering the market’.
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