Investors target the region

The fair brought together exhibitors and visitors from all over the world. The vast majority were companies and visitors from Germany (77 pct of exhibitors and 70 pct of visitors). Exhibitors from the UK, the US, Austria, Switzerland, France, Luxembourg, Spain and the Netherlands were also present, but there was no shortage of Central and Eastern European representatives – mainly from Poland, the Czech Republic and Hungary.

The Warsaw stand stood out and was crowded throughout the event, while there was also a hubbub at the Budapest, Moscow, Ostrava and Kraków stands as well as those of individual companies, such as Skanska, HB Reavis, Echo Investment and EPP, which all have ambitious plans. “Q22 is up for sale and we are negotiating with a number of investors; however, it is too early to provide any details. We are starting another large project. A contract has been signed for the construction work on the first stage of our Warsaw Brewery project,” announced Nicklas Lindberg, the president of Echo Investment. Hadley Dean, the president of Echo Polska Properties (EPP), was also in an optimistic mood, revealing that the company is looking for its next acquisition opportunities. “In order to achieve our projected results we should buy at least two or three properties per year,” he said.

His attitude is not an isolated one, particularly considering the fact that financial institutions are no longer hesitant when it comes to project financing and refinancing. “We can see a lot of potential on the CEE markets. The main ones for us are Poland, Hungary, Romania and of course Austria. We are financing buildings that are fully leased with loans at around 60–65 pct LTV,” declared Richard Wilkinson, the CEO of Erste Group Immorent.

Jeroen van der Toolen, the managing director of Ghelamco CEE, expects that the developer’s winning streak on the investment market will continue and is also negotiating with investors for the sale of Warsaw Spire. “We have leased app. 90 pct of the space and are in negotiations with a few groups of investors for the sale of Warsaw Spire, but we are in no hurry. I don’t believe that it will take place this year,” says the head of Ghelamco, CEE. Meanwhile, Rafał Szczepański, the vice-president of BBI Development, commented that the difficulties involved in its project preparations could take years. “The planning procedure for the area in Warsaw where Roma Tower is to be built has been in progress for as many as six years. Those organisations that are protesting against the plan have not participated in its development for many years and now they are employing emotional arguments against it. Institutions that actually operate on the real estate market need predictability and stability to develop projects and to respect the local residents. This is what the planning procedure is for,” argues the president of BBI Development.

Foreign players are also attracted by the idea of new investment – and not only in Poland. Mitiska REIM, with equity of EUR 190 mln following the second closure of its latest fund (FRI2), is preparing an offensive as well as its third closure. “Including credit, our investment capacity has increased more than twofold to around EUR 500 mln. About half of this amount is earmarked for investment in Central and Eastern Europe. Poland will most probably take between EUR 50 mln and EUR 100 mln of the investment amount (equity of EUR 40–50 mln). We are currently looking at projects in Poland and if all goes well, we should announce one large acquisition before the end of this year,” said David Tejml, the head of Mitiska REIM’s operations in the CEE region.

Futureal is also looking for new investment opportunities. “We are still looking around for new projects in various sectors, such as retail, residential and office projects in a number of cities. I’m thinking about Warsaw just as much as regional cities,” revealed Péter Karai, the commercial real estate sales and marketing director of Futureal Group. However, the latest project by the company, the première of which took place in Munich, is the Etele Plaza shopping centre in Budapest, which will add 53,000 sqm to the city’s market.

Hotels could turn out to be one of the most promising real estate sectors as they have recently been benefiting from a significant increase in tourist traffic. “App. 1 bln tourist trips were registered across the world in 2012. In 2015 there were 1.2 bln such trips. This represents huge growth and we expect that the number of tourist trips globally will exceed 2 bln in the 2025–2027 period,” estimated Dirk Bakker, a partner and head of EMEA hotels at Colliers International. “The traffic is mostly being generated by tourists from Asia. The Chinese are in the top five most travelled nations, whereas ten years ago they were not even in the top twenty. They started with excursions to London, Paris, Amsterdam and Rome and are now visiting all kinds of places, including CEE countries. I expect that we will be seeing a considerable growth in tourist traffic in this region over the next few years,” announced Dirk Bakker. The head of the hotel agency at Colliers also expects that we will be witnessing more mergers comparable that of Marriott and Starwood.