Investors are now returning to crisis-hit Central and Eastern Europe, Doug Hardman, DTZ Investment Director for Continental Europe said in an interview with PropertyEU. The big difference now is that investors are looking much more on a country-by-country basis rather than the region as a whole, he said.
Investors are now returning to crisis-hit Central and Eastern Europe, Doug Hardman, DTZ Investment Director for Continental Europe said in an interview with PropertyEU. The big difference now is that investors are looking much more on a country-by-country basis rather than the region as a whole, he said.
‘The biggest mistake investors in Central and Eastern Europe made in the past was not to differentiate between the different countries and economies. In reality, a country like Bulgaria doesn’t begin to compare with the likes of the Czech Republic or Hungary,’ Hardman said on the fringes of this year’s EXPO REAL trade fair in Munich.
Hardman said investors are now much more discerning about where they invest in CEE. ‘Poland is now on everybody’s wish-list, and recent major investment in Hungary is a sign that the appetite for risk is on the up in that country. And risk is the key to investments in the region, Hardman added. ‘If you understand the different risks in each country, it’s a lot easier to identify good investments.’
Polish retail is a prime example of a market hit hard by the financial and economic crises that is now showing early signs of recovery, he said. Most tenants of major retail developments signed euro-denominated leases and then saw the zloty plummet against the euro. Not to mention the fact the economic recession led to a sharp fall in their local currency income.
The biggest challenge right now, he says, is not so much establishing the current yields as establishing sustainable levels of income from assets. ‘That takes real involvement and intensive asset management.’
DTZ has recently won a number of management contracts for retail properties, thanks in part to its London-based specialist retail team. ‘I still belive that retail has a lot of potential in the CEE region. Consumers in a countries like Poland and Hungary are nowhere near as indebted as consumers in, say, London and when they have money in their pockets again they’re much more likely to simply spend it.’
