Realcast: Inflation takes a toll, CEE reveals its strength, PV sees interest, living a life saver
In the spotlight this week:
Inflation was a serious influence in the US midterms and closer to home as Real Asset Media’s CEE Investment Briefing underlined. While CEE is fundamentally strong, foreign investors perceive risk there because of the region’s proximity to Ukraine, particularly US and Asian investors.
But CEE region had good first quarter investment volumes which, although reduced, are still respectable. Nevertheless, values could fall 15-30% leading domestic investors more comfortable with the risks to take advantage of the opportunities.
Office and Retail have attracted the most investments so far this year in CEE but experts believe residential has the most potential, especially the private rented sector, particularly because of the rising cost of mortgage interest..
The logistics sector was already thriving, but reshoring and labour costs are making it more attractive as too is the possible expansion of the Schengen area to Romania and Bulgaria.
Meanwhile, deal values and and pricing are an issue raised in the UK press with values down by as much as 40% as interest rate rises bite. The UK real estate market has just weathered its worst quarter since 2008 and the GFC.
Commercial real estate investment transactions declined throughout Europe in the third quarter There are bright spots though and US investors have invested substantially in London offices. And now could be the time for opportunistic real estate investors throughout the continent because of falling capital values.
Among notable recent transactions/would-be transactions: Aggregate Holdings announced the sale of three segments of Berlin’s Quartier Heidestrasse for €488 million; Samsung SRA pland to bring the Commerz Tower in Frankfurt to the market and brokers are apparently pitching for the role of selling the office tower for which Samsung wants about €650 million; Glaxo Smith Klein have sold surplus development land north of London, to UBS asset management and Rreef group who plan to invest up to £900 million to develop the 33-acre site and create a life science campus; Commerz Real has made its first investment in the Danish photovoltaic market.
And in the week that Knight Frank research revealed that there’s about €151 billion of new capital heading for the European living sectors, partners Pension Insurance Corporation and Octopus Real Estate announced that they are set to develop their first integrated retirement community in a joint venture with Elysian residences.
Click on the video to see the full discussion or listen to the podcast below.