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CEE-6 markets hit new heights

Anna Pakulniewicz 04 February 2019

Anna Pakulniewicz


+48 22 356 25 07

Ania covers the Baltic states’ real estate markets, architecture and urban planning in Warsaw as well as interior design. She is also the co-founder of Eurobuild TV. Among others, she has been employed by TVN CNBC, PAP Insider, WBJ (The Observer), Poland Monthly and IMM. She graduated from the Warsaw School of Economics, majoring in international relations. She has also completed postgraduate studies in macroeconomic analysis. In addition to this, she studied Lithuanian philology

CEE REGION Last year, Investment markets in the CEE region recorded a volume of EUR 13.8 bln up 5 pct y-o-y, states Colliers International in its latest “Outlook 2019: Climbing at the altitude” report.

Colliers International believes that the CEE economy is to be dominated by Eurozone interest rates, which remain flat at zero pct. These should ease any economic suffering caused by tightening credit conditions, and keep liquidity high. Colliers predicts selective compression in capital city prime office yields and believes the logistics sector will continue to grow. Funding from lenders should remain supportive.

“A continuation of the pattern of pay hikes well above inflation should support consumption and rents in 2019. It is that recent pattern of wage rises that should see the service sector grow within CEE economies in the coming years, sheltering the region somewhat from any blizzards appearing in the global economy,” says Mark Robinson, CEE research specialist, at Colliers International.

The availability of cheap funding has been a major factor in the strong performance of real estate markets in Europe and CEE over recent years. In 2018, yields continued to fall only for capital city offices and selected retail transactions.

Colliers International expects, again, in 2019 that only selected locations will see further compression (mainly capital city offices). Funding rates for transactions are low but with the capital gains seen in recent years, the yield premiums have shrunk. Premiums look most attractive in the industrial sector. Colliers International prefers logistics exposure rather than manufacturing.

The growth of the Eurozone money supply has slowed persistently since the end of 2016, which is a sure sign of a slowdown in Europe, which means that at best growth in the CEE-6 will level off.

Consumer sentiment peaked in most of the CEE-6 between 6 and 12 months ago, and earlier in Romania. Applying an 18-month lead timing to that points to a slowdown in mid to late 2019. Colliers however does not believe that there is a coming disaster.

CEE-6 consists of: Poland, Czech Republic, Slovakia, Hungary, Romania, Bulgaria.

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