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CEE Colliers’ predictions for 2024

Investment & finance
The CEE-6 is poised for a significant GDP growth rate surge, tripling from below 1 pct last year to around 2.5 pct, retail parks continue to be a central focus driving market growth, the slowdown in deliveries of new offices will aid in filling vacant spaces, especially in modern/ESG-compliant offices – these are some of the predictions for the CEE-6 in 2024 just revealed by Colliers.

Economy: firming growth expectations

The favourable dynamic of the CEE region expressed by the triple increase of GDP is supported by several factors, from an improving external picture (the Eurozone is also set to bounce back) to dwindling inflation/interest rates compared to 2021-2023 levels to a robust inflow of capital for investments. It is noteworthy that longer term forecasts look even rosier: by 2028, as per IMF forecasts, the CEE-6 – if it were to be regarded as a single economy – would be one of the top 10 largest in the world.
Silviu Pop, director, Research, Romania & CEE at Colliers

Geopolitics: seeking a new balance

Russia’s invasion of Ukraine and the reshuffling of relations between China and Western nations are cause for both concern and uncertainties. However, for much of the CEE region, we recall the 2023 headline from the Financial Times: “The rise of middle powers”. Poland and maybe Romania are the only ones in the CEE-6 which may fit the bill size-wise, while the countries remain entrenched in the Western sphere of influence. But the region’s geographic position makes it that much more relevant going forward in the changing waters of international relations, which should benefit the CEE-6 over the longer term. Of great importance to the geopolitical balance are elections being held in 2024, not just in some CEE countries, but also in major economies, like the US, India and the UK.

Capital flows: a new gold rush in CEE

The CEE region continues to be an attractive prospect for re-/near-shoring for Western economies, given the wide gap between productivity and labour costs for all the countries in the region. Change is already taking place, with all CEE displaying, even as of 2023, a solid level of capex in the economy, which is comfortably above the average for the previous cycle. Moreover, in 2023 Czech Republic, Poland, and Romania saw record levels of gross capital formation. All of this suggests a rosy medium-term outlook, with hefty job creation leading to solid wage gains and increasing purchasing power, while some positives should already be visible this year.

Retail: talking about expansion

The decline in inflation rates and the stronger economic outlook are bound to be on the agenda for many retail developers and investors as they take stock of areas or towns in the CEE which can still accommodate fresh schemes. Compared to Western Europe, the cover of modern retail schemes in the CEE is certainly smaller, even subpar in some regions, so it is not a question of “if”, rather “when” such gaps will be filled. Retail parks remain a key focal point spearheading the growth of the market in the CEE as they can be deployed at lower costs for developers and also target smaller towns, while big mixed-use schemes are also being developed in some cities, a testament to the heterogeneity with a country, not just between the CEE-6. On the demand side, while the decline in inflation should help the consumer, we nevertheless see a strong outlook for discounters.

Investment: still not there yet

While the light of lower interest rates is visible at the end of the tunnel, we are still not there yet given that loans are set to remain much more expensive than they were in 2021-2022 for many years to come. Furthermore, there is the problematic aspect of capital values, which have decreased steadily over the last year and a half, and as such, a lot of investors are waiting on the sidelines waiting for a better opportunity to buy, while for sellers, they would rather hold onto their assets if possible. Therefore, at least for H1 2024, we would expect to be another lackluster period for CRE investments in the CEE region. Still, we should see some tentative green shoots for activity in the second part of the year, provided that interest rates come down in the Eurozone and in the US, that economic activity remains at decent levels and that refinancing triggers some requirements to sell.

Offices: diminished pipeline to help subsequent recovery

For the most part, 2024 is likely to bring a sharp slowdown in deliveries of new offices. In some instances, like in the capitals of Slovakia and Romania, (almost) no significant office projects are due to be delivered in 2024. For now, it is still very much a market driven largely by tenants as vacancy rates remain in double digit territory in CEE capitals (with the exception of Prague). The saving grace here is that the slowdown in deliveries will help absorb the vacant spaces, particularly those in modern/ESG-compliant offices and maybe gradually tilt the equilibrium towards a neutral market by the end of 2024.

Industrial: rental rates stabilization

With construction costs normalizing and, in some cases, vacancy on an upward trajectory as of 2022 or 2023, Colliers experts anticipate a stabilization or at least a slower growth of rents in the CEE region. The last few years have seen an unprecedented increase in rents which dents the region’s overall attractiveness, though we would argue that when placed alongside the hefty gap between wages and output, the region still looks way better than Western European alternatives.

ESG: green is no longer just a buzzword

Tenants, landlords and investors in all CEE countries are increasingly focusing on the quality of buildings. The gap between older/outdated and modern/efficient buildings is becoming increasingly wider in terms of a multitude of factors, from rents to attractiveness for tenants and occupancy rates to capital values. In turn, we view this as a decisive factor in pushing for more and more retrofitting of older buildings which may become viable. Timing-wise, these changes are coming at a bad time, as the green push is coming in a difficult context for the market, given how high interest rates are. Furthermore, we need to acknowledge how relevant the green characteristics are on the financing side, as banks need take into account not just the value of the building itself, but how efficient and future-proof it is.

AI: coming to an office near you

Speaking of buzzwords, “AI” could arguably be 2023’s biggest when it comes to corporate circles. While the world has been talking mostly about the possibilities of machine learning until now, we are clearly entering practical territory. Things like multimodal AI that could greatly enhance productivity are becoming a reality, while smart office solutions that better the relationship between tenant and landlord are maturing. All of these should prop up the hybrid work regime present in the office market, but we also feel, and not just in the CEE, but throughout the world, that fears over the death of the office work model have been proven as greatly overstated, as most companies clearly still need their employees to have face-to-face interactions.

Residential: a different story around every corner

While some real estate themes are somewhat uniform across the region, arguably the most diverse is the residential scene. The affordability of new apartments can range from quite decent in cities like Bucharest and Sofia, to bubbly territory in Prague and Bratislava. While a decrease in interest rates should help move things a bit in the right direction, it mostly comes down to different regulatory issues and legislative hurdles (notably the slow authorization cycle), so no changes or improvements should be expected fairly quickly. Amid this uncertain backdrop, PRS schemes should continue to gain traction across parts of the CEE region. For Poland and Hungary, however, some challenges for rental schemes derive from currency risk, while countries that either have the EUR or a somewhat stable currency regime, this is either fully or almost a non-issue.

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schedule 12 April 2024
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Poland Excellent Fern at Off Piotrkowska

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Romania Marelvi is set to stay at MLP Bucharest West

schedule 12 April 2024
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Marelvi, a distributor of electronics and home appliances in Romania, has extended its lease agreement for more than 8,100 sqm of space at the MLP Bucharest West logistics park. 

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schedule 11 April 2024
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Poland Midocean takes more and more

schedule 10 April 2024
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Panattoni has launched the construction of Panattoni Park Ruda Śląska IV. A major tenant has already been found with Midocean to lease 20,000 sqm of storage space, including an extension option for a further 10,000 sqm.

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Poland Big splash in Silesia

schedule 10 April 2024
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Mitiska REIM has sold a 6.7ha land plot to Momentum Leisure to develop a theme and water park which will further reinforce the offering of the Europa Centralna retail center, located in Gliwice.

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Czech Republic Domeq is doing WELL

schedule 09 April 2024
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CTP, in cooperation with Ruby Project Management, has received the highest level of the WELL certification for its project Domeq in Brno. It's the first residential investment in the country to meet the criteria.

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Poland Additional loan for Hillwood

schedule 08 April 2024
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Hillwood has increased its loan with Millennium Bank to EUR 29 mln for the construction of phase II of the Park Hillwood Zgierz I project, located in Central Poland, 2.5 km from the A2 motorway entrance and 15.5 km from the A1 motorway junction.

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Poland Hermes by the German border

schedule 08 April 2024
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Panattoni has finished the construction of a logistics centre for Hermes Fulfilment. This is the first project that has been built for the company in Poland.

Office & mixed-use development

Romania Bucharest office market remains fluid and flexible

schedule 08 April 2024
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Two distinct trends have emerged in 2023: securing entry into prime new locations and optimising the portfolio through best value negotiations, all driven by a market with limited deliveries. After the first three months of this year, the office sector in Bucharest shows a positive fluctuation in terms of total leasing activity, being 71 pct higher than the same period last year.

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Poland Tristram Carfrae on sustainable engineering

schedule 07 April 2024
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Poland Cornerstone laid for Booster Zabrze

schedule 05 April 2024
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LemonTree, in cooperation with Commercecon, has launched the construction of Booster Zabrze following the cornerstone ceremony for the project. The mixed-use development will ultimately offer more than 100,000 sqm of retail, logistics and office space, surrounded by landscaping — accessible to both tenants and local residents.

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Poland Refinancing secured for Galeria Młociny

schedule 04 April 2024
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EPP and Echo Investment have successfully secured a loan worth EUR 145.2 mln for the new financing of the Galeria Młociny shopping centre in Warsaw.

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Romania One United Properties moves into premium housing

schedule 04 April 2024
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One United Properties has concluded a memorandum of understanding with CPI Property Group for the acquisition of a 21 ha site close to the Eroii Revoluției metro station just south of Bucharest city centre. The project planned on the site should see the construction of round 5,000 housing units.

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Poland For the seventh time for K-Flex

schedule 04 April 2024
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Panattoni is developing another BTS project for K-Flex – an international manufacturer of elastomeric thermal and acoustic insulation materials. A seventh building of 20,000 sqm in the warehousing and manufacturing complex in Uniejów will be completed in June this year.

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Poland Loan for Dobrzykowice

schedule 04 April 2024
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Hillwood Polska has signed a loan agreement with mBank worth more than EUR 28.4 mln for the construction of a warehouse in Dobrzykowice near Wrocław. The building will be part of the Hillwood Wrocław East project being developed together with LCube.

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Poland Prefabricated for students

schedule 04 April 2024
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Solida Capital Europe and 1 Asset Management selected Pekabex for the execution of the purpose student housing PBSA project located in Puławska street in Warsaw.

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Romania Maracana won't move out

schedule 04 April 2024
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Investment & finance

POLAND Grójecka 5 sold and renamed

schedule 04 April 2024
Nathan North
deputy editor

Dubai-headquartered investment platform Solida Capital has acquired the G5 office building at ul. Grójecka 5 in central Warsaw from Cromwell European REIT for EUR 15.86 mln. The property is to undergo a refurbishment following the change of ownership and will be rebranded as G5 Prime Offices.

Retail & leisure

Poland Terg invests in retail parks

schedule 03 April 2024
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Terg, the owner of Media Expert, plans to strengthen its portfolio of investments in its own retail locations. The company wants to put into operation facilities with a total area of 72,000 sqm within the next two years.

Latest in Investment & finance

schedule 10 April 2024

Big splash in Silesia

Mitiska REIM has sold a 6.7ha land plot to Momentum Leisure to develop a theme and water park which will further reinforce the offering of the Europa Centralna retail center, located in Gliwice.

schedule 08 April 2024

Additional loan for Hillwood

Hillwood has increased its loan with Millennium Bank to EUR 29 mln for the construction of phase II of the Park Hillwood Zgierz I project, located in Central Poland, 2.5 km from the A2 motorway entrance and 15.5 km from the A1 motorway junction.

schedule 04 April 2024

Refinancing secured for Galeria Młociny

EPP and Echo Investment have successfully secured a loan worth EUR 145.2 mln for the new financing of the Galeria Młociny shopping centre in Warsaw.

schedule 04 April 2024

Loan for Dobrzykowice

Hillwood Polska has signed a loan agreement with mBank worth more than EUR 28.4 mln for the construction of a warehouse in Dobrzykowice near Wrocław. The building will be part of the Hillwood Wrocław East project being developed together with LCube.

schedule 04 April 2024

Grójecka 5 sold and renamed

Dubai-headquartered investment platform Solida Capital has acquired the G5 office building at ul. Grójecka 5 in central Warsaw from Cromwell European REIT for EUR 15.86 mln. The property is to undergo a refurbishment following the change of ownership and will be rebranded as G5 Prime Offices.

schedule 03 April 2024

Panattoni gets millions

Panattoni has gotten financing to develop a factory for global lighting expert Trilux, a company that specialises in environmentally-friendly B2B solutions. The loan of EUR 18,3 mln was granted by Alior Bank.

schedule 03 April 2024

1AM buys half of Lipowy Office Park for students

Hungarian real estate group Futureal Investment Partners has sold for an undisclosed sum two buildings of Lipowy Office Park in Warsaw to the 1AM CEE Student Housing Fund, which is managed by Vilnius-based 1 Asset Management.

schedule 03 April 2024

WDP swoops for Expo Market Doraly

ARA Europe and the Romanian investor Gheorghe Iaciu have sold the Expo Market Doraly shopping centre in Afumați on Bucharest’s north-eastern outskirts to Belgian warehousing group WDP for an undisclosed sum.

schedule 03 April 2024

Faedra22 in German hands

Hungarian developer Faedra Group has sold its 16,600 sqm Faedra22 warehouse development in southern Budapest to a German investor for an undisclosed sum.

schedule 02 April 2024

MLP remains optimistic

MLP Group has unveiled the key goals of its growth strategy for 2024–2028. The 2024 plans have been updated in response to shifts in the macro environment and the impact of the war in Ukraine.

schedule 20 March 2024

Another quarter of negative performance

Inrev’s Quarterly Fund Index confirms an ongoing correction in the European real estate market. The Q4 2023 performance was yet again negative, a total return of -1.70 pct, and a sharp decline from -0.56 pct reported in Q3 2023.

schedule 18 March 2024

Real estate at a pivot point

Despite the monetary headwinds and continued economic uncertainty around the world, there is a strong belief that the global real estate industry is at a "pivot point", with improving prospects ahead for renewed investment activity, according to the latest Emerging Trends in Real Estate® Global Outlook 2024 from PwC and the Urban Land Institute. 

schedule 12 March 2024

NEPI Rockcastle boosts the pipeline

NEPI Rockcastle has expanded its development and refurbishment pipeline in 2024 to just over EUR 650 mln across its Central and Eastern European markets, the biggest retail investment programme in the region.

schedule 11 March 2024

Rock Park Przeworsk changes owner

The Rock Park Przeworsk retail park, opened at the beginning of February, gained a new owner after a month of operation. The transaction took place between RockCapital. and ME Invest, a company owned by TERG S.A., owner of the Media Expert chain. 

schedule 07 March 2024

MLP Group announces EUR 41 mln bond issue

MLP Group has successfully placed EUR 41 mln worth of bonds, comprising an entire issue, with 35 investors in a public offering intended for qualified buyers. The transaction was arranged and conducted by mBank.

schedule 05 March 2024

Technopolis Ozas sold in Vilnius

Investment firm Lords LB Asset Management has completed the purchase of the Technopolis Ozas office campus in Vilnius with a total area of over 100,000 sqm. The seller was Technopolis Lietuva.

schedule 04 March 2024

Żabka Group concludes formal process of merging

Żabka Group has received approval from the Romanian National Authority for Consumer Protection to acquire a majority stake in FMCG distribution leader DRIM Daniel Distributie in Romania. As a result, Żabka Group met all regulatory requirements and finalised the transaction.

schedule 29 February 2024

Europe must be ready for "twin transitions"

Erste Group Bank recorded an operating result of 5.5 bln euros in 2023, an increase of 38 pct compared to the previous year. The company expects that economies in CEE region return to growth path in 2024.

schedule 29 February 2024

Panattoni builds, Millennium finances

Panattoni has received financing for the expansion of Panattoni Park Ruda Śląska II. The loan of EUR 9.4 mln was granted by Millennium Bank.

schedule 26 February 2024

Rebalancing of prices is expected

According to a survey by Colliers presented at a February meeting of Czech and Slovak investors and other financial experts, active in commercial real estate, investment volumes in CEE-6 fell by around 52 pct to EUR 5.1 bln in 2023, reaching a ten-year low. Czech capital, however, retains strongest position in the region.

Edition 4 (287) April 2024

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