Eastern And Central European Markets Show Increased Investment InflowThe real-estate markets in eastern and central European countries reported an increased number of investments last year. While all other markets have been on an upward swing, Ukraine's property market appears bleak for the near future. Central European investors are slowly drifting from the reliable, safe markets of the Czech Republic and Poland, to other high-yielding markets within Europe.
Czech and Polish markets attract investors
CBRE, a property agent, reports that Russia saw its transactions shoot up by 40 percent last year, amounting to ?5.2 billion. Poland reported an increase of 9 percent, gathering ?3 billion in transactions.
The Czech Republic showed a staggering improvement of 68 percent coming up to ?1 billion. Nearly all markets reported an increase in the number of transactions except Ukraine, whose transactions dipped from 2012's ?241 million to ?41 million last year.
The Czech republic and Poland have been identified as being amongst the steadier markets in eastern and central Europe. The security and rate of growth in these countries attract investors from the US, Austria and Germany. The growth rates in the Czech Republic and Poland are expected to accelerate in the future, while the interest rates may not rise this year. Bank are no longer hesitant about lending, and developers can finance their projects a lot more easily. Retail warehouses are in demand as the manufacturing industry continues to move forward.
Despite the fact that institutional funds continue to grace the Czech and Polish property markets, investors willing to take risks are investing in Romanian and Hungarian properties that have been neglected earlier. Globalworth is a firm that has invested ?500 million in Bucharest - Romania's capital city. Its Deputy Chief Executive, Dimitris Raptis, says that the lower levels of competition is working out well for them, as they are able to dabble with target assets in a lucrative manner. The company has been raising another ?200 million to make further investments in the country.
Cyclic patterns to affect Warsaw property market
Despite the slight risk that comes with it, investors have the potential of earning double the returns by investing in Warsaw, when compared to Paris or London where the yields are at 3 percent. The drop in yields from Western markets is making investors look for better options. Private equity, investment and pension funds are thronging these markets, and Asian and Middle Eastern investors are planning on venturing here as well.
Warsaw's office building market has been garnering a large amount of demand in the market. The number of office buildings that were completed last year reached record-highs. The net office space that tenants took over was almost 300,000 square metres, which is nearly 7 percent more than its 2012 values.
With 500,000 square metres expected to arrive into the market in a span of 18-24 months, competition could spark amongst landlords to offer lucrative rents. This could cause the renting prices to dip in the future. Mr. Dimitris warns saying that if the international capital flows and market cycles continue in their usual course, the yields from Prague and Warsaw may dip to extreme lengths in the future. This may cause investors to look at other markets such as Romania, he says.