CEE markets facing 2024 with a mood of cautious optimism

The mood in the CEE market is one of cautious optimism that things will improve, according to Kevin Turpin, regional director, capital markets, CEE, Colliers.

“There are a lot of touch points that will impact on whether this year is better. One of those obviously revolves around the financing and the cost of that,” Turpin told Real Asset Insight’s Richard Betts.

There are also implications in the ways that groups, investors, developers and occupiers approach ESG and its implementation, particularly in view of the regulations coming into force for banks this year concerning reporting.

He also said that the results of year-end valuations will provide an interesting indicator in terms of “what they take into consideration in terms of any price adjustments – ESG for one. Hopefully, we’ll see a bit more activity and better results than we did last year.”

Some of the markets of South Eastern Europe are interesting too. “They joined the European Union a little bit later in 2007, whereas Poland, Czech Republic etc joined in 2004.” The timing for the SEE countries, such as Romania and Bulgaria, was unfortunate as the global financial crisis occurred soon after they joined the EU. But, he added, “they’ve done very, very well and there’s some great opportunities. For example, Romania has just been accepted into Shengen for air and sea transport. Hopefully that will develop into road as well.”

In terms of the investment markets, they are a bit further afield than the core markets of Poland and Czech Republic. “The perception is something that we have to deal with but there are certain investors that that prefer those types of markets.”

Israeli, South African and other capital is among these. “There’s still great things to come from those markets and hopefully this year we’ll see a bit more,” Turpin said.

The CEE region’s location  is attractive strategically for foreign direct investment projects too. “It’s very attractive because it’s close to Western Europe, offers a low lower cost base and markets like Poland have good land availability.”

Even though other markets are smaller like Czech Republic and have less availability and slightly higher costs, those companies which have a customer base in Europe and are having problems with their supply chain will and are already considering central Europe.

The last few years has seen central European property investors take an active role. “They know their markets very well, they’re comfortable with and can easily get to them, view them and manage and maintain them. Over the years we’ve seen this pool of domestic investors from across the region grow significantly.”

One such group is Czech investors who have not found sufficient opportunities to purchase properties in their own country so they’ve gone elsewhere, such as Poland.

“There was a bit of a pause when they were over-weight in Poland, so they pushed back towards other markets. Now they are coming back because, again, there’s still not enough product for them to buy.”

Turpin said that the market fundamentals look good in the mid-term. “We need to get over the negativity that’s faced us in the markets, but they’ll come back and see that the opportunities here are very strong.”