Colliers: Investment volumes in the CEE markets hit 13.8 billion in 2018: 2019 will bring selective compression in capital city prime office yields

The real estate consultancy company Colliers International reveals in its latest CEE report that we ascended to record volumes of 13.8 billion Euro in the CEE region, up 5% year-on-year in 2018.

For 2019, Colliers experts expect the Eurozone interest rates to be flat-lining at zero, thus keeping liquidity high, buyers interested and helping pricing to plateau. We foresee selective compression in capital city prime office yields.

“A continuation of the pattern of pay hikes well above inflation should support consumption and rents in 2019. It is that recent pattern of wage rises that should see the service sector grow within CEE economies in the coming years, sheltering the region somewhat from any blizzards appearing in the global economy”, Mark Robinson, CEE Research Specialist at Colliers International, commented.

“Romanian investment volumes stood at a bit under 950 million Euro, a meagre dip compared to 2017. For 2019, we are moderately optimistic. The economy is set to continue expanding around its potential growth rate, which is double the EU’s average. Normally, this, alongside a juicy yield gap between Romanian products and those in other CEE countries, would be enough, especially given that office pipeline suggests over half a billion euros. Still, the bigger risks (both economic- and political noise-related) are a source of concern”, Silviu Pop, Head of Research at Colliers International Romania, said.

Colliers specialists believe investors in real estate in the CEE-6 must be increasingly wary of other risks in this thinner air. These include an overheating development cycle, labour shortages, progress in the ease of doing business of competitor peers around the world, Brexit and related EU funding cuts, “populist” CEE politics and asset taxation risk. E-commerce and “flex-working” are longer term disrupters.