Investors’ interest in alternative sectors in the CEE region is undimmed, experts agreed this week at the Investment Capital & Sectors: What are the New Risks? briefing, part of the online CEE Summit organised by Real Asset Media and Poland Today.
“Investor demand has increased by 30% this year, focusing especially on Poland, Budapest and Prague,” said Samuel Vetrak, CEO, Bonard. “We have more work in CEE than ever, with companies assessing opportunities and wanting information, detailed reports, macro and micro analysis and performance data on the sector.”
Poland has attracted a lot of interest because it offers scale, he said, giving international investors the opportunity to build a portfolio.
Poland has 1.3 million students, many excellent universities and a provision rate of 9%, with the public sector providing most student accommodation. There is considerable demand for high quality PBSA.
“Poland for us has been a logical extension of our pan-European PBSA portfolio,” said Douglas Edwards, head of group equity raising and client services, Corestate Capital Investors. “Our strategy is city-driven and Poland has the advantage of having many dynamic cities.”
The one challenge to the growth of the sector, said Edwards, is the banking sector which could be more supportive.
Banks need to see more track record
“It’s not easy to get deals financed in alternative sectors like PBSA, because it’s too early, we always need a track record,” said Justyna Kedzierska-Klukowska, head of Warsaw office, BerlinHyp. “But we’re monitoring the student housing sector very closely. Banks follow clients, so the more transactions there are, the more liquid the market becomes, the more financing will be available.”
When a new asset class comes to the market local banks often are resistant and extra-cautious because they do not understand it.
“We’ve seen this happen in Spain and in the Netherlands,” said Vetrak. “We need the foreign banks to lead the way and step in with confidence because they know the success student housing has had in other countries. They should educate the local banks and speed up the growth of the sector.”
Student accommodation is just one of the sectors with growth potential in CEE.
“We’re focusing on PBSA but we see Poland as more than one sector,” Edwards said. “In future senior living will be very interesting. It has great potential but it’s still in its infancy.”
Investors are re-assessing their strategies and priorities and trying to spot which sectors will be the winners in the post-pandemic “new normal” next year.
“Investors are now looking at alternatives to logistics, like life sciences and data centres,” said Herman Kok, head of research, Mark (formerly Meyer Bergman). “There’s great potential there, but supply is limited and so are investment opportunities. We need more information and knowledge in order to tailor a profitable strategy.”