EUROPE - Real estate investors are wrong to shun "politically difficult" Central and Eastern European (CEE) markets as long as those markets remain economically dependent on Brussels, according to Holger Schmidtmayr, board member of Vienna-based property firm S-Immo.
"Once the market moves from crisis mood to greed mood, everything will change," he said.
"But right now, German investors are buying in Germany because they know it - Bucharest and Sofia are a little far away. Everyone's crying 'Mama, what did I do with my money?'"
Schmidtmayr pointed to a lack of institutional investor interest in Hungarian real estate despite inflation-linked rising rents, and an occupancy rate of above 90% in the firm's own commercial assets "even under challenging circumstances".
"It's better than you see in the papers - even if it is a politically difficult market," he said. "The problem is that no-one knows what [Hungarian prime minister Viktor Orbán] will say tomorrow."
He added: "Despite the negative investor perception, Hungary depends on Brussels. That's why we only invest in the EU. It's an environment where [European Commission president José Manuel] Barroso can hit Orbán with a stick and tell him: 'You can't do that.'"
The Austrian firm, which is 10% owned by the Vienna Insurance Group, has written down its Hungarian portfolio for the third consecutive year.
CEE investments make up 20% of its portfolio, though none of the assets sold over the past two years.
Despite the bullish assessment, S-Immo forecasts GDP growth in Hungary will this year be -0.8%, with 77% public debt.
In contrast, the GDP forecast for Romania - where the firm invested in a shopping centre development via a joint venture - is 1.25%, with public debt of 34.8%.
Schmidtmayr was similarly upbeat about Romania's macro prospects, notably the success of wage cuts and a VAT increase under the terms of an IMF bailout.
"People didn't take to the street and burn cars," he said, pointing to a rise in consumer spending.
"The austerity worked, but the political angle isn't easy."