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CEE real estate market resilent to socio-economic changes

Jeff Alson • 02/05/2022
The CEE real estate investment market has been on the radar of many market watchers over the past year. But the war in Ukraine, inflation uncertainty, increasing construction costs, and fast-changing interest rates have all taken their toll on the region. The real estate market has nevertheless proven resilient, with several large transactions in the first quarter of 2022. EPP’s acquisition of the M1 retail portfolio and landmark transactions (e.g. The Warsaw Hub in Poland) have contributed to high volumes in the first quarter - otherwise typically a low point of the year.

“The war in Ukraine has delayed some deals leading to overall smaller volumes. Despite this interrupted momentum, continuing over from Q1, we observe some liquidity returning to retail – a trend we expect to continue. Commercial real estate investment transaction activity is likely to remain slow during Q2 with a subdued market. Agreed deals are being closed but they are considered “fragile” in the light of the regional economic slowdown, inflation, and uncertainty. The fragility of the CEE real estate investment market is most acute in the sector most dependent on rental growth – industrial. As rental growth continues over the coming months, we expect to see pent-up capital being more easily deployed. This should boost deals in the region, particularly in the industrial sector” – said Jeff Alson MRICS, International Partner and Head of CEE Capital Markets in Cushman & Wakefield.


The total value of transactions closed during the first three months of 2022 was €1.6 billion, 56% being in the office sector. The first quarter saw the highest deal volume in the office sector since the end of 2019. This was the result of the largest single project acquisition in Poland's history - Google's acquisition of The Warsaw Hub office scheme for €583 million. This transaction shows the continued confidence of foreign investors in the Polish market despite increased uncertainty.


The Czech property market is still defined by the limited number of properties available for sale. This leads to limited overall activity at present. There is no clear direction apparent on the market, though industrial properties are the most popular.

Due to ongoing evolution in key parameters like rental levels, expected indexation, as well as financing, operating and construction costs, the market is facing a high level of uncertainty. This is impacting deals in progress, as well as the willingness of buyers and sellers to enter new deals. 

However, sectors, submarkets, and properties whose downsides are naturally hedged by the upsides - i.e. those with low vacancy and a low level of competitive threats - are resilient even amid this volatility.


2022 started very strongly with transactions such as Akademia Business Center in Budapest leading the way. Whilst the war in Ukraine has increased investor caution, transactions have continued to close – notably Adventum Group’s acquisition of the cross-border Tesco portfolio and OBI.


In Slovakia, there are several ongoing transactions in all asset classes, the majority of which we expect to close this year. This fact demonstrates strong demand among investors after two years of COVID-19 uncertainty. Although pandemic restrictions have already been lifted and businesses are now operating without any restrictions, the continuing war in Ukraine and its implications may harm investment activity.


The local investment market has already absorbed the initial shock of the war in Ukraine, with investors remaining confident that the fundamentals of the local market are solid. The office segment remains most active and the decision to lift Covid-19 restrictions has enhanced the appetite for retail and hospitality assets. We expect 2022 to be at least as good as the last few years.


industrial rail (image)
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Upward pressure on rental rates and rising construction costs on the one hand and a growing focus on ESG and repositioning of commercial buildings on the other. Faced with the current pace of change in the real estate market, many investors are looking at 2023 with a degree of uncertainty. Are there any reasons to be fearful? And how will the economic slowdown shape trends and sentiments in each real estate sector in the short term? 
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Upward pressure on rental rates and rising construction costs on the one hand and a growing focus on ESG and repositioning of commercial buildings on the other. Faced with the current pace of change in the real estate market, many investors are looking at 2023 with a degree of uncertainty. Are there any reasons to be fearful? And how will the economic slowdown shape trends and sentiments in each real estate sector in the short term? 
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Rising prices in physical stores encourage people to shop online

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Retail began to transform well before the COVID-19 pandemic. It has, however, evolved a lot faster than expected and the pandemic has created a whole new environment which all market participants have to learn to navigate. Global real estate services firm Cushman & Wakefield has issued its latest report “Is Confidence Returning to the Retail Market?” highlighting what the retail market looks like from the perspective of tenants, landlords and customers. 
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The office market is now at the epicentre of changes caused by the transition to the remote work model due to the Covid-19 epidemic. However, with the epidemic situation improving, organisations have already commenced planning the return of employees to the workplace. The analysis of the findings of a survey of tenants of the office buildings in the portfolio of properties under management of Cushman & Wakefield Poland reveals how companies are preparing for this change.
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Through our proprietary Experience per Square FootTM (XSF) tool, Cushman & Wakefield has captured more than 2.5 million data points from workers all over the globe in the pre-COVID-19 era and a further 1.7 million data points from more than 50,000 respondents in the current work from home environment.

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Cushman & Wakefield summarises Poland’s regional city office markets

At the end of 2019, the combined office stock of Poland’s regional city office markets climbed to 5.61 million sq m, surpassing Warsaw’s 5.59 million sq m for the first time in history. The total office stock of the nation’s nine largest markets (Warsaw, Krakow, Wrocław, Tricity, the Upper Silesian and Zagłębie Metropolis, Poznań, Łódź, Lublin, and Szczecin) came close to 11.2 million sq m at the end of last year, representing an almost 8% increase on 2018’s level.

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Cushman & Wakefield: a summary of the Polish retail market in 2019

Global real estate services firm Cushman & Wakefield has summarized the Polish retail market. 406,000 sq m of retail space was handed over in 2019. The development pipeline currently stands at approximately 500,000 sq m, 85% of which is scheduled for opening by the end of 2020. Going forward, investors’ interest will increasingly shift towards smaller cities below 100,000 inhabitants, says Cushman & Wakefield.

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Role of the sharing economy in the Polish economy. Cushman & Wakefield presents its latest report “Co-living – a new era for the real estate investment market in Poland”

Co-living is making inroads into the Polish real estate market. It is a trend where residents share living space and a set of interests and values in line with their financial capabilities - it has already gained traction in the United States and Western Europe, but is just beginning to emerge in Poland, thereby offering a huge growth potential.
Mira Kantor-Pikus • 03/03/2020


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