The real estate markets of Southeastern Europe have been witnessing low transaction volumes and falling values for some time now, due to investors’ growing aversion to risk. But market analysts say the situation in the region is set to improve.
“Investors’ aversion to risk has increased across Europe in the past year as the sovereign debt crisis and other macro concerns have dominated the agenda and generally led to increased caution among investors and occupiers,” said David Hutchings, head of European research at Cushman & Wakefield.
“Smaller and less liquid markets have in particular suffered as a result of this and much of SEE falls in to this category,” he added.
Cyprus’ banking sector, for one, is quite dependent on that of Greece, and is suffering due to a perception of high risk.
“Cyprus, having a banking sector closely linked to Greece and becoming the latest country to seek a bailout, is also suffering from limited investor interest,” said Eri Mitsostergiou, director European research at Savills.
Investor interest, meanwhile, has been low in other countries in the region, such as Romania and Bulgaria.
“Romania and Bulgaria are less weighed down by fiscal burdens … nevertheless, investor interest has been sporadic there and focused on prime assets,” Ms Mitsostergiou said. “Most of the prime deals have now taken place in the market,” she added.
However, analysts say that prospects for the region are positive. The EU and the European Central Bank are taking steps to ease the uncertainty surrounding the future of the euro zone. These steps, analysts say, should boost investor confidence and eliminate some of the speculation taking place in markets. This is especially important for Greece, where speculative trades are being made in relation to its possible exit from the currency bloc.
Analysts say that while most investors will stay focused on core markets in Western Europe, the shortage of appropriate stock in most areas and demand for yields will cause some of them to look more widely around Europe for opportunities, in places such as the SEE region.
“If the current euro crisis does not worsen, we are cautiously optimistic about the near to medium term future – we are for sure not at the end of the crisis or close to the end, but hopefully we have passed the end of the beginning,” said Jens J. Moller Madsen, managing director SEE at Jones Lang LaSalle.
From Warsaw Business Journal by Izabela Depczyk
Commemorating Europe Day, EU faces key challenges
BY Stratfor Global Intelligence
Deputy PM cries out for attention
BY Remi Adekoya