The forum, entitled ‘Buying Signals: Is now the time to dig into the Southeast European Property Markets?’ was organized by CEE Insight Forum in association with the Financial Times
and brought together senior representatives of the region’s leading investors, developers, consultants and service providers to discuss current sentiment, challenges and opportunities in the sector. The event was opened with a business welcome by Croatian Minister of Economy Djuro Popijac who emphasized the efforts being made to strengthen Croatia’s appeal to inward investors including the real estate sector.
The forum also marked the launch of entries for the 2010 CEEQA Awards for business performance and achievement in Central and Eastern European real estate, with the announcement of inclusion of the SEE markets for the first time.
A key note address by EBRD’s Director of Property & Tourism, Sylvia Gansser-Potts struck a note of optimism for the markets, highlighting the depth of their interest with 34% of its current €1.9 bln. loan and equity portfolio dedicated to the SEE markets, and stressing efforts to bring commercial banks into the arena by offering extended credit lines and EBRD-backed syndicated finance partnerships. The bank sees a favorable medium term outlook for the region, with the likes of Albania, Bosnia & Herzegovina, Bulgaria, Macedonia and Serbia moving into positive growth for 2010 and the remainder joining them in 2011.
A pivotal moment in the forum was the announcement by Eli Alroy, Chairman of GTC and one of the most active and deeply invested developers in the region, that the worst was over, the market had bottomed out and it was a good time for developers – but that some governments must do more to speed up tax and statutory process reform to assist investors, a view supported by former Deputy Prime Minister of Croatia and economic advisor to the President, Borislav Skegro, who heads up Croatia’s only homegrown fund Quaestus Invest.
Alroy’s optimism was shared by two of the leading opportunity investors in the emerging Europe arena, presenter Otis Spencer of Heitman International and panelist H. Cabot Lodge III of WP Carey, who concurred that the quality of produce and higher risk returns offered by the SEE markets will quickly become attractive as the CE markets converge further with western Europe and get too expensive. Both have demonstrated their commitment with significant acquisitions already and more in the pipeline, Spencer said there was some upside for investors as well as developers that the downturn had ‘shaken out the amateurs’ and toughened the supply side.
This rising sentiment was borne out by agents Troy Javaher of Jones Lang LaSalle, Philip Bay of Colliers International, Ward Stocker of King Sturge and Jos Tromp of CB Richard Ellis, all of whom signaled a sense that investment interest was returning though it wasn’t yet translating into transactions, principally because of the absence of liquidity but also because of sweeping perceptions by many investors as well as banks.
Javaher’s analysis of investor response was supported by Stocker who said that some investors and also most banks are currently too generalized in their assessments to see where quality product and attractive margins are available, a theme that also ran through the presentations of Gansser-Potts and Spencer. Another deterrent is high rents in primary city CBDs like Bucharest, which are being marked as unsustainable by investors but which is also creating an opening for developers to service demand for premium, lower cost business space.
Most panelists agreed with the assertion of Jörg Banzhaf, CIO of retail investor Atrium European Real Estate, that when the market did return the focus would initially be almost exclusively on primary cities, some of which were already over supplied in retail. Cabot Lodge noted one of the key features of EU orientation is an influx to primary cities chasing work and money stemming from infrastructure investment, with knock on effects for residential as well as commercial demand, but he stated a preference for properties that serve a local demography rather than properties that are location sensitive.
The forum concluded with a presentation on the 2010 award categories, jury and judging timetable for the CEE Real Estate Quality Awards [CEEQA], including the announcement of the extension of CEEQA’s coverage to include those SEE as well as CEE markets undergoing economic and political reorientation since 1989. The entry deadline for the 2010 awards is January 7, 2011, the winners will be announced at the eighth annual CEEQA Gala to be hosted in the newly refurbished banqueting facilities of the Warsaw Marriott Hotel. Entry forms for the awards can be downloaded from the CEEQA website at www.ceeqa.com
.Source: Imagine Live Media