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Emerging market opportunities

October 4, 2016

 

The weight of capital is doing its magic again. Emerging European markets have seen an increasing number of investors across the board - from experienced Western European investors moving eastwards, to new offshore investors lured into Central and Eastern European markets by yields attractive relative to pricey Western Europe.

 

According to some sources, investment across Eastern Europe grew 60% in the first half of 2016 relative to the previous (record) year. Led by Poland, all markets have seen a spike in activity. Much of Eastern Europe, to the disbelief of western bigots, has proven resilient and learned much from the mistakes of the previous, painful cycle. Across many of Eastern Europe’s markets - especially the smaller countries - the learning curve among real estate practitioners, investors and lenders has been particularly steep. An excessive reliance on credit to fund investment transactions has given way to greater contributions from locally-sourced

 

capital. Native real estate professionals - once apprentices to foreign practitioners - are taking over markets. While undoubtedly some of the completed transactions reflect exuberance, Eastern Europe offers unparalleled long-term growth for property investors.

 

The strengthening of the region’s consumer markets provides strong foundations for the growth of the retail sector. A highly educated workforce is pushing innovation and improvements in transparency and public sector accountability, fuelling local and outsourced office demand. Continued investment into transport infrastructure has supported the case for Eastern Europe as a key piece in the continent’s supply chain. Greater trust in online marketplaces and ample greenfield and brownfield development opportunities are a blank canvas for buddying e-commerce development. All these factors are working simultaneously to lay a positive development path for the region.

 

In the long-term, provided that it continues on this path, Eastern Europe will offer unique investment prospects to those with the right partners and investment approaches.

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