Investment and development financing for real estate is readily available across most of CEE, and a new Polish real estate investment trust (REIT) structure is set to bring in more local capital to the country's real estate sector next year.
Speaking at a CEE Investment Briefing at Colliers International's London office organised by PropertyEU, Ian Worboys CEO of P3 Logistic Parks, said that banks all across Europe had 'been fighting to refinance €1.4 bn of our debt recently.'
'We have absolutely no problem in securing finance at amazing rates in Poland and Czech Republic, and even in Romania where interest rates two years ago were 5-6% and are now 2%. Hungary is a bit strained but it should be up there with the others,' said Worboys.
Fellow panelist Walter Hampel, head of real estate finance, CEE, at pbb Deutsche Pfandbriefbank agreed that Budapest is catching up. 'We have always financed in Poland, Czech Republic, Hungary and Slovakia and continue to do so today. We cautiously went into Romania but never touched Bulgaria as is a very small and difficult market to do cross-border lending; we leave that to the banks that are already there,' said Hampel.
'Like us, most German banks restrict themselves to investment loans. Who is providing development loans? In places like Poland and Czech Republic there are strong local banks, albeit some foreign-owned, that do this.'
'‘The Czech banking market is probably one of the most competitive in Europe. It is slightly more difficult in Hungary where there are still issues in the banking sector which they are only beginning to solve. Interestingly Romania has a stronger banking sector than Hungary,' said Hampel.
'The market in Budapest is catching up to where it actually belongs I would say. We have always financed in those four markets and continue to do so today. We cautiously went into Romania but never touched Bulgaria as it is a very small and difficult market to do cross-border lending; we leave that to the banks that are already there.'
Peter Karia, sales director at Hungarian developer Futureal, said he can find finance in the country from local subsidiaries of international banks and there are 'at least three or four banks prepared to give development loans right now.'
Commenting on local and intra-market lending, Omar Sattar, managing director, Czech Republic at Colliers, explained that local capital sources have been rising in CEE since 2010. In the Czech Republic local capital accounts for between 20-40% of deals per year. In Hungary only domestic capital was available until two years ago.
'But domestic capital in Poland doesn't pay a big part in the real estate market. However Poland is developing a REIT product from next year based on the US REIT formula, which will bring in domestic capital to real estate,' said Sattar.
