North-south investment divide cuts through CEE

Cross-border investors no longer think of Europe as Western Europe and Central and Eastern Europe, but rather in terms of a north-south divide, according to Walter Hampel, head of real estate finance CEE at pbb Deutsche Pfandbriefbank.

Hampel made the claim during a panel discussion at PropertyEU's second investment briefing on the CEE region. The event was hosted by CBRE in London on 3 September.

The 100-strong audience heard that 90% of the property investment so far this year in CEE has taken place in Poland and the Czech Republic. 'This underlines the point that in terms of international investors I don't think Europe is divided between Western Europe and Central and Eastern Europe. Today, Europe is divided between Northern Europe or stable Europe and Southern Europe where nobody wants to invest.'

'People are dividing the world in the countries they want to invest in - Germany, France, UK, Poland and the Czech Republic. You might add Scandinavia and maybe the Benelux to the list for some people. But then you have Southern Europe - Spain, Portugal, Italy, Romania and Hungary and Greece. Basically the area that is considered to be difficult. This is the way that the investment world looks at Europe today,' Hampel said.

Poland and the Czech Republic, he said, have matured. 'I would challenge whether a place like Poland is really considered an emerging market anymore.'

Hampel acknowledged that Deutsche Pfandbriefbank had provided Heitman European Property Partners IV fund (HEPP IV) with a EUR 60 mln facility in January this year for the acquisition of two office properties in Budapest. The bank also did a few financings in Spain this year. 'Clearly you would only do this at very low leverage and high returns.'

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