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CEE Summit: Recovery will take region out of crisis in 2021

(Top L to R) Sabina Kalyan, Richard Betts, Hannes Wimmer,
(Middle) Noah Steinberg, Daniel Harris, Petra Blazkova,
(Bottom) Marcin Juszczyk, Richard Stephens.

CEE countries will recover very quickly from the Covid-19 crisis but investors must choose locations carefully, delegates heard yesterday at the Investment locations and opportunities: Countries and Cities briefing, part of the online CEE Summit organised by Real Asset Media and Poland Today.

“The CEE region still looks like a good investment to us,” said Sabina Kalyan, co-global head of research and global chief economist, CBRE Global Investors. “Now there’s a limit to capital flows from the US or Asia, but there’s no reason why they shouldn’t bounce back. I’m optimistic on that front.”

The positive thing is that investors have shown their confidence in the market by staying and continuing with their projects.

“There’s been no collapse this year so we don’t see a bounce back so much as a tremendous progression in 2021,” said Noah Steinberg, chairman & CEO of Wing, and chairman of the supervisory board, Echo Investment. “We’re expanding our regional footprint because we see a very positive scenario coming out of the crisis in all CEE markets.”

There is interest in the capital cities but also in regional cities, especially in Poland.

“We’re strong believers in regional cities,” said Marcin Juszczyk, member of the management board, Capital Park. “Most of our portfolio is in Warsaw, but our pipeline is focused on the regions, places like Krakow, which is the accounting capital of Europe, or Gdansk and Katowice, which are very dynamic and fast-growing.”

Great opportunities for investors with local knowledge

There are great opportunities for investors with local knowledge and boots on the ground, but locations have to be chosen carefully to avoid problems in the future.

“CEE cities have a strong potential but the supply side is a challenge,” said Petra Blazkova, head of continental European research, LaSalle Investment Management. “The market is easily oversupplied, which means you can’t generate rental growth and rents could even decline when there is a crisis. So we look closely at vacancy rates and we are very selective when choosing locations to invest in.”

The recovery out of the Covid-19 crisis is being helped by the availability of financing, in contrast to the GFC.

“This is not a lending crisis and the banks this time are part of the solution rather than being part of the problem,” said Hannes Wimmer, executive director, loan syndication, Erste Group Bank. “Our institutional clients are still investing in the region and we support them. Institutional investors are in CEE to stay and so are we.”