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CEE has ‘huge long-term potential’

Central and Eastern European cities must be proactive and promote themselves in order to attract investment and lure their expatriates back, delegates agreed at the PropertyEU CEE Investment Opportunities, which was held at EXPO REAL in October.

‘We cannot sit in our office and wait for things to happen,’ said Adam Pustelnick, Investor Service and International Cooperation Bureau, City of Lodz. ‘We are hungry for investment and for people, and to achieve our goals we must make our cities as attractive as possible so that people come, are happy and choose to stay.’

Talent is needed to fuel economic growth but it is attracted by good opportunities as well as a good environment. ‘We cannot compete with London or New York, but we shouldn’t try to,’ he said. ‘Warsaw or Lodz will never have that kind of status, but we don’t have to be a Maserati, we can settle for being a BMW and be extremely successful in the region. Our economy, our quality of life and our infrastructure have all improved.’

Poland and other countries in the area have a huge long-term potential, said Daniel Puchalski, Head of Land Advisory Services, JLL Poland: ‘We will see significant growth in the next ten years, but we cannot rely on something going wrong somewhere else, like Brexit, which led to a lot of requests from London. We must make a case.’

The residential and hospitality sectors are booming and attracting interest from private investors as well as institutions. ‘In the last year 47,000 apartments were sold in Warsaw, which is an absolute record for CEE,’ he said. ‘People see real estate as a safe haven preferable to gold or stocks, and 40% of the purchases were made in cash.’

Many private investors buy to enter the short-stay market, but it is showing signs of overheating, warned Wojciech Dolinski, Valuation Partner, Horwath HTL: ‘Short-let is a booming sector in Poland but there could be an oversupply soon which would have a detrimental effect,’ he said. ‘We already see a downward trend on ADR and lower occupancy rates. I believe we have passed the top of the cycle.’

Student housing is also attracting a lot of attention, said Puchalski: ‘Two years ago there was nothing, last year there were 6 companies looking at the sector and this year we have 11 big investors seeking to get into student housing in the top ten cities in Poland.’

The Polish market is 2/3 years behind Western Europe so it is still open to new trends, said Bart Sasim, Founder & CEO, SPX, which provides a short stay/student housing/hotel hybrid. ‘We help investors and developers to create experience, which is what customers want rather than products,’ he said. ‘We started in the Netherlands then moved to Belgium and Germany, but next year we plan to move into Poland which we regard as a very promising market.’

Poland is ahead but Romania is joining in the activity, said Ionut Oprea, Publisher, Office, Logistic and Industrial, with a $1 bn investment to extend Bucharest airport and increase the number of international flights and destinations to attract more investors.

‘All the sectors are booming and Bucharest in particular is a real magnet,’ he said. ‘The regional cities are also promoting themselves under the Transylvania brand, which is more recognisable for foreign investors.’