The core of the problem
Investment & financeCEE REGION As European investors - spooked by the euro zone crisis and the gloomy economic prognosis - fall back on the security of prime assets, where does this leave the market for non-core product in the CEE region? As Tristam Larder, the director of Savills' cross border investment team, recently stated: "Opportunity funds can't base their business models off future yield compression - they need active asset management angles. Core funds, on the other hand, are looking for prime assets or good quality assets with long leases in ?B+' locations. There is a middle ground of secondary assets with no immediate asset management angle languishing between the two types of buyer."
On the Polish office market, core properties are still generally perceived to be those located in Warsaw's CBD, while those in the city's Mokotów business district are less core, and those in the centres of provincial cities tend to be regarded as secondary. For Polish retail, the word ?core' tends to be applied to major shopping centres in the five largest cities, but can also cover the dominant malls in smaller cities. How much in the way of secondary assets exists in the CEE region? According to Michał Ćwikliński, the head of investment at Savills in Poland: "In Warsaw's Mokotów district there is currently around EUR 750 mln of office properties for sale - a large volume considering that around EUR 1.5 bln of offices were transacted last year in Poland."Lack of domestic investorsThe supply of non-core to the investment market is clearly there, but the CEE region is currently facing a different kind of problem regarding the demand for these assets to, for example, Western Europe
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