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Spike in investment volumes in CEE expected in H2 2021

Sentiment about the real estate market is positive and activity will pick up in Central and Eastern Europe, experts agreed at Real Asset Media’s European Outlook 2021 – CEE briefing, which was held online recently.

“Sentiment turned positive towards the end of last year and it was a dramatic change compared to Q3, when there was no visibility as to the future and it felt like the music had stopped,” said Luke Dawson, managing director & head of capital markets CEE at Colliers International.

The expectation is of a spike in investment volumes in the second half of the year if the pandemic is contained.

Luke Dawson, Colliers International

“H2 will be very positive, the prediction in our Outlook is of a 50% increase in volumes and more portfolio deals as people want to diversify risk,” Dawson said. ‘‘The capital hasn’t gone away, it’s been sitting on the sidelines waiting for more properties to come to the market.”

There are two factors behind this renewed optimism: the vaccine, which brings the hope of an end to the pandemic, and market fundamentals which favour real estate.

“The expectation is of a massive equity wave into real estate, as major pension funds and other global players will increase direct allocations from 8-12% to 15 and even 20%,” said Tomas Picha, senior director of transactions, CEE, at Invesco Real Estate. “Vaccines have influenced the investment market and sentiment is more positive. If there’s no third wave of coronavirus, then there’ll be a big spike in investment activity.”

The new-found optimism is not just fuelling activity but also making financing easier.

Tomas Picha, Invesco Real Estate

“What’s important for us is that all market players are convinced the outlook is positive,” said Justyna Kedzierska-Klukowska, head of Warsaw office at Berlin Hyp. “Once the pandemic recedes, then activity will pick up again at full pace.”

Sentiment is positive and expectations are of a sustained pick-up in activity this year, but it will take time for the damage done by the pandemic to be fully repaired.

“Full recovery in CEE markets will come soon, but definitely not this year,” said Dawson. “Realistically, it will be 2022 before we are back to the high activity levels of 2019.”