Dentons has once again co-authored the CEE Investment Report 2019 – a short analysis of the region’s attractiveness as an investment location for overseas capital. The special focus of this year’s edition is on CEE metropolises and the office market. The guide has been compiled in collaboration with Skanska and Colliers International.

Last year’s investment in real estate markets in CEE reached approximately €13.2 billion, with over €5 billion in the office market. According to the Report, the region will keep up the momentum. A favorable economic situation and a very good performance of the CEE cities drive demand for new investments, including in the office market. The office stock has been growing over recent years and now totals 21.8 million sq.m. throughout the entire CEE. Forecasted completions by 2021 will increase it by another 20% - to 26.5 million sq.m.

The strong development of the office market has attracted an unprecedented inflow of overseas capital, ranging from South Africa to Asia. While since 2013, the CEE region has accounted for less than 3% of all capital spent by Asian investors outside their home continent, this year that figure jumped to 9.5% in CEE, and within Europe it has risen to 14.5%. The total value of Asian capital invested directly in CEE since 2013 is €7.7 billion, compared to, for example, the €8.6 billion inflow of German capital.

Paweł Dębowski, Co-Chairman of the Europe Real Estate group at Dentons, pointed out that ”FTSE Russell’s decision of September 2018 to upgrade Poland from ‘emerging’ to ‘developed’ economy placed this country in one basket with other global economies like the US, Germany, France and Japan. It therefore put Warsaw and key Polish cities on the radar of out-of-region investors, including from South Korea”. In his view, “Capital cities in CEE, like Warsaw, Prague or Budapest, are the answer to a growing number of investors who are looking for value.”

David Dixon, a partner at Dentons’ Warsaw office with a focus on cross-border real estate transactions, noted that, “In the last year Asian investors have really made their presence known in CEE, particularly the South Koreans”.

Recent data included in the Report proves these opinions. South Koreans are currently the most active foreign investors in CEE, and they are playing an increasingly important role in the commercial real estate market. At the same time, “Singaporean capital is also strongly represented and, while the Chinese have paused a bit as they digest the ramifications of the trade war with the US, the long-term Chinese Belt and Road initiative bodes well for their future investment,” Dixon added. He further predicts that “Favorable exchange rate considerations and higher yields in CEE, coupled with the availability of first-class office buildings and logistics developments should continue to stimulate Asian investment in the coming months”.

Apart from an overview regarding capital and investment market in the CEE, the Report describes extensively the development of CEE cities, which have gone through profound economic and social transformations and provides a comparison of most dynamic and fastest growing metropolitan cities with particular emphasis on CEE metropolises.

Click here to read more: CEE Investment Report 2019: Thriving Metropolitan Cities.