Geopolitics and capital constraints weigh on Central and Eastern Europe’s real estate outlook

Central and Eastern Europe’s real estate markets face a mixed outlook as investors navigate geopolitical uncertainty, currency risk, and persistent capital constraints — with Poland, the region’s largest market, at the centre of the discussion.

At the opening panel of the CEE Summit held in Warsaw on 4–5 June 2025, market participants warned that a shortage of domestic capital continued to hamper liquidity and investor confidence.

Ulrich von Creytz, chief investment officer of real estate Europe at DWS — a German asset manager affiliated with Deutsche Bank — said the lack of domestic and international capital was weighing heavily on Poland’s property market. He argued that building up local sources of funding was essential to address the liquidity shortfall. “This is something that this country needs to change — that especially institutional capital from this country but also retail capital is investing within,” he said.

He added that while Warsaw was the largest real estate market in the region, institutional investors remained cautious due to its proximity to the war in Ukraine.

“The biggest challenge here in this market is that we have a lack in liquidity due to a lack of investors coming into this market,” said von Creytz. “Institutional investors are reluctant currently to invest in Poland because they are afraid of the close vicinity to Ukraine and Russia.”

“They would always invest in Helsinki but don’t think that it’s a good time to invest in Warsaw.”

Peter Heckelsmüller, head of acquisitions and sales for CEE countries, Austria and Switzerland at Deka Immobilien — the real estate investment arm of Germany’s Deka Group — said that German funds had seen solid performance on the buy side. Still, exits remained difficult due to limited local interest. He contrasted this with the Czech Republic, where domestic funds had raised around €1.5 billion in the first half of 2025.

“Whenever we bought properties, we had good cash flows, we had good returns,” he said. “But when it comes to an exit… it’s really a limited party who are interested.”

“German funds may also have had very big properties… which at these times are difficult to sell,” Heckelsmüller said.

Janusz Dzianachowski, national managing partner and head of real estate at Addleshaw Goddard — a UK-based international law firm — noted that most of the Polish market remained foreign-owned. He said structural barriers, including restrictions on pension fund investment and a lack of REIT structures, had blocked the development of local capital channels.

“Polish real estate market is probably like 97%, 98% foreign owned,” he said. “For many years, the pension funds have not been able to invest in real estate… we could easily have an offer to individuals to invest money in real estate rather than just buying individual apartments. We need to change something in order to basically enhance the liquidity.”

Despite the capital constraints, speakers said investor interest remained strong in core sectors such as logistics and prime offices, especially in Warsaw. Von Creytz said logistics remained the top opportunity, supported by yield compression and continued demand, with rents expected to rise in the medium term.

“The favourite pick remains to be logistics in Poland,” he said. “We have a great yield situation there currently… the demand will remain strong, and we will see rental growth in the medium term.”

He also highlighted prime offices as attractive, particularly in Warsaw, where new developments were limited.

“Here, a prime office in this city is really interesting,” von Creytz said. “The office supply side in the next three, four years looks beautiful for someone who wants to invest because there’s not much coming on.”

Dorota Latkowska-Diniejko, co-founder and president of the management board at REINO Group — a Polish investment and asset management platform — said that the limited supply had already driven up office rents, with tenants now facing significantly higher lease costs.

“Maybe one office building, maybe two, and the rents are already going up,” she said. “Whoever didn’t sign the lease two years ago, probably right now, will need to pay 10% to 15% more.”

She added that Poland was starting to benefit from the long-term relocation of manufacturing and logistics operations from Germany, part of a reshoring trend that had previously been discussed but not yet realised.

“We see that many of those investments are more moving also factories from Germany. Part of the new shoring trend is finally happening after three, four years that we were talking about it.”

Speakers also flagged growing investor interest in alternative real estate segments, though progress was uneven. Latkowska-Diniejko said data centre development was constrained by limited access to energy.

“Our data centres started, but already we’ve got just five sites for the big data centres,” she said. “Access to the power is more limited.”

Von Creytz said international appetite for operational real estate — such as student housing and senior living — and science-led assets would grow, but these remain difficult to underwrite without euro-denominated leases.

“We really need a Euro-denominated lease contract due to the high currency hedging costs,” he said.

On senior housing, Dzianachowski said the sector was unlikely to scale up quickly, citing Poland’s traditionally conservative social attitudes and the dominance of zloty-denominated payments as key barriers for international investors. While panellists remained broadly optimistic about the fundamentals in logistics, prime office, and selected retail and hotel assets, they warned that new capital — particularly domestic — was essential to avoid stagnation in the CEE investment cycle.