Outlook ’25: move West to East as German investors prefer CEE

There is a real move from West to East as German investors look to Poland, delegates heard at Real Asset Media’s European Outlook 2025: Focus on CEE, which took place recently in Warsaw and was hosted by Colliers.

Thomas Kaechele, Director, Head of Germany & CEE, M&G Real Estate

“We have seen a lot of companies going East, not just in the logistics sector but production as well”, said Thomas Kaechele, director, head of Germany & CEE, M&G Real Estate. “Recently Miele and Mercedes-Benz, two iconic German companies, have moved part of their production to Poland. It is quite a shock to the system for Germany, but there are good reasons for this ongoing move from West to East. There is a better environment on this side of the border, less obstacles and bureaucracy than in Germany.”

The reason it makes sense is that the economy is more robust in Poland. Consumer confidence is stronger, and people have more money to buy, he said, which explains the growth in online shopping. The rise of e-commerce, as well as the nearshoring trend, have driven the logistics sector.

There are opportunities at every level, said Fabian Haupt, senior director real estate & M&A, FLE: “We like long leases and have done some interesting sale & leaseback transactions, focusing on smaller warehouses in the €10-35 million range.”

Other positives for the market, apart from Poland’s geographical location, include the availability of skilled labour as well as a strong infrastructure network.

“There are really good opportunities in logistics and the occupier market is very strong,” said Dorota Wysokińska-Kuzdra, senior partner, head of corporate finance CEE, Colliers. “Offices also accounted for a third of transactions in 2024 and I have no doubt the asset class will do well this year, even if some buildings will need repositioning.”

Dorota Wysokińska-Kuzdra, Senior Partner, Head of Corporate Finance CEE, Colliers

The living sector is also set for growth: sales volumes of resi have increased and student housing and co-living schemes are 100% let. The institutional rental market is new to Poland, where 85% of homes are owner-occupied, but renting is becoming more popular, especially in the big cities.

“The fundamentals of the living sector are excellent”, said Wysokińska-Kuzdra. “BTR is doing well and the biggest platforms on the market generate double-digit net returns. Residential only accounted for €400 million last year, but I am sure volumes will increase this year. There are some good platforms on the market which could attract new capital to Poland, so prospects are good.”

There have not been platform transactions yet, but it might happen this year. One possible obstacle is the Polish zloty, as investors need to hedge against currency risk and “hedging kills returns”, she said.

Within the living sector student housing has huge potential, as Poland is offering over 1,000 University courses taught in English and the numbers of international students keep growing.

“There’s a big opportunity there,” said Kaechele. “Foreign students want good quality accommodation; they do not want to negotiate a contract with a local private landlord. Micro-living is also a growing segment, but more professional operators are needed.”

At the other end of the demographic scale senior living also is a growing segment.

“The fundamentals are clear, as people age and demand will only increase,” said Wysokińska-Kuzdra. “It is a Europe-wide trend, but you need to adjust to the needs and peculiarities of the local market.”

Whether it is logistics or retail, offices or residential, the experts’ advice is to invest soon, before the economy improves even further and the market takes off.      

“The window of opportunity is still open, but it will close soon,” said Kaechele.

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