Foreign investors in CEE are expanding into alternative assets, experts agreed at Real Asset Media’s Outlook 2020 – Europe & CEE investment briefing, which took place in Budapest recently.
‘We are definitely seeing a lot more interest from international capital in student housing and build to rent,’ said Luke Dawson, Managing Director & Head of Capital Markets CEE, Colliers International. ‘It will be foreign capital that will drive this trend’.
The problem is that foreign investors, especially Asian, want scale.
‘Foreign investors want platforms with hundreds or even thousands of student beds, which we just don’t have in the region,’ Dawson said. ‘Poland is the only market that can offer that kind of deal’.
A Japanese group recently bought into the biggest student housing player in Poland and more deals of this kind are expected.
‘Size really matters,’ said Thomas Frater, Founder & CEO, Hussar & Co. ‘Big investors want to spend €100 mln-plus but only Poland has size as well as stability’.
Hungary has seen impressive growth and development in the last few years but it is not able to offer scale.
‘I got an email from a private equity company looking to invest €100 mln to invest in student housing and we just don’t have that kind of product in Hungary,’ said Zinaida Onczay-Vojnar, Partner & Head of Real Estate, Considero Investments. ‘There is great interest in alternatives but we don’t have the product or the scale yet’.
The range of foreign investors who are interested in the region is becoming ever wider. Blackstone has just sold the largest privately held residential portfolio in the Czech Republic – some 43,000 resi units in the Moravia-Silesia region – for €1.3 bln to a Heimstaden Bostad, a Swedish real estate company.
Large-scale build to rent will be driven by institutional core money that has a long-term view on cities, especially University towns, according to Tom Lisiecki, CEO, Member of the Board, TriGranit.
‘The market is not set up yet for large-scale build to rent,’ he said. ‘You can’t pre-lease apartments so it’s got to be speculative developments, which private equity hates. Most of our money comes from private equity so it’s hard to take a punt on build to rent’.
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