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Small talk
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About a year ago, we discussed the difficult situation on the investment market. As far as I remember, you expected that it would last 2–3 years. Are you still holding to this forecast?

Georg Blaschke, head of real estate finance for the CEE & Benelux, Helaba: It seems that our predictions were not too conservative. The markets are continuing to wait for a cut in interest rates, which could kick off new activity. These cuts haven’t really happened yet, although the ECB took a first step towards this in June – and that’s why the markets are still in a wait-and-see mode. Due to the uncertainty, investors have now also adjusted their real estate investment ratios towards fixed-income instruments – and that means that the money wall has somehow become less of a wall.

What are the biggest challenges for the market and your company at the moment?

I think the last two years have shown us that sustainability is here to stay. New green assets are the flavour of the month for both investors and lenders. The challenge is how to approach older assets. Investors need to understand that – depending on the age and condition of the asset – capex will be required to either upgrade these assets or just to transform them from brown to green. The challenge also involves understanding the tenant requirements in terms of the space they lease. In order for buildings to be attractive, it’s not sufficient to just have white walls. Buildings need to provide an environment attractive enough for employees to want to come to the office. They need to be cost-efficient, since service charges as the second form of rent make a bigger impact on tenants’ budgets in times of steadily increasing energy costs. For the banks, the challenge is therefore to finance the right assets and identify the right asset manager. For us, active asset management with own people on the ground is one of the key factors in the success of a company. However, the real estate sector has already started to come to terms with these requirements.

Which do you think the most promising countries and market sectors are going to be in terms of investment over the months ahead of us?

All the asset classes in Poland and the Czech Republic are certainly worth looking at. Yields seem to have stabilised at attractive levels and we are seeing an increasing investor appetite; however, this is still on a small scale and mainly from investors who have already been investing in Poland, understand the market and have been patiently waiting for a good moment. These are mostly either local partners or from neighbouring countries. We can see this in Warsaw for offices, in the main logistics hubs like Warsaw, Wrocław and Gdańsk, and for retail parks in even smaller locations but where the local competition is more limited. PRS is also an interesting sector, where the number of good quality assets with professional and reliable management is still limited and there is room for new product. And even though the tenant demand in the major cities has probably slowed down a little, it is still strong. Newly completed assets coming onto the marking are still renting out quickly and occupancy is still close to 100 pct. Helaba is confident about these markets and will continue to finance all these four sectors.

Does Helaba still consider Poland a promising market? Why?

We’ve been active in Poland for more than 15 years and are proud to have been involved in such wonderful projects as Varso Place and Warsaw Spire. Poland is the strongest of all the CEE markets, our neighbour and Germany’s 5th largest trading partner – ahead of even Italy, the UK and Switzerland. Poland therefore continues to be one of Helaba’s core markets. Poland and Warsaw in general have proven to be resilient markets with only a very limited amount of problem loans, unlike many Western markets. In terms of real estate, Poland is still a fairly young country, which means that the majority of the core office assets in the main cities have been developed in the last ten years or so, and, therefore, are of high quality and continue to be attractive for tenants. The country’s well-educated and young labour force continues to attract new tenants from abroad who are looking for office space – although we have seen in the regions that Poland’s great success has led to increasing salaries, which has suddenly turned other CEE countries into competitors for companies moving to the region. In the retail sector, turnovers and footfall have returned to pre-Covid levels, while yields are still attractive despite the current interest rate levels. For me personally, Poland is a beautiful country that I have been enjoying traveling to since the early 90s, with people who are both very warm and business-minded and enjoy developing beautiful real estate with a long-term view to making tenants and visitors happy – and they always have new ideas on how to improve and are ready to think outside the box.

What are your plans for the summer? Where will you be recharging your batteries?

Now that our two kids are older and have almost flown the nest, we increasingly enjoy going on road trips. Last year, we did this in Belgium, visiting Ghent, Bruges and Brussels. Just before Easter, we went to eastern Germany to admire the Bauhaus architecture in Dessau and the exquisite cultural heritage and residential architecture of Görlitz, before visiting beautiful Prague. This summer we will go to Normandy, all the way to Mont St Michel via Reims and Étretat, and we’ll be taking in one or two castles in the Loire Valley on the way back. We always end up taking a look at retail assets and outlet centres, and do some “business shopping” on our trips. Last year, we did this in Roermond and this year we’ll probably be doing this in Zweibrücken.

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