Colliers Investment team: Angela Kolesnikova, Rolands Bogdanovs, Jelena Morozova
In a time of major upheaval #exporeal2022 reaffirmed how valuable it is as a platform for information exchange within real estate industry. 1,900 exhibitors and almost 40,000 attendees - the show has almost reached 2019 levels of participation.
Key topics at the show included rising prices and inflation, interest rate policies, ESG requirements, future investment prospects and the overall economic situation. The event provided important guidance and a good sentiment as to the wiser strategy over the next six to nine months, whether it will be a wait and see, or rather take a very targeted advantage of the current market opportunities.
Some of the key event observations:
Ø Most markets will be impacted by the economic turbulence and energy crisis. Therefore, investors are stress testing existing portfolios and carefully evaluating next steps.
Ø This impact catches up faster within large, liquid markets such as Poland, Germany, etc., where yields have already started to shift.
Ø Smaller markets within CEE and the Baltics seem to have more resilient local microclimate. Limited alternative investment choices affect local real estate markets by keeping yields more stable for now.
Ø Tenant behaviour and ability of the property owners to adjust and optimise building related expenses will be one of the key elements as it comes to future property values.
Ø Limitations on full indexations from the owners might result in further affect on the property values, as assets might not provide full inflation hedge.
Ø Financing costs remain the main obstacle for investor returns. No/low LTV investors will have stronger market position and are prepared to take advantage of the opportunities.
Ø With large amount of equity out there, prime properties could still trade with no discount. However, substantial number of potential newcomers would look for “good deals” to enter the market.
It seemed increasingly important to discuss current challenges, in order to overcome them and to jointly identify attractive opportunities, as well as to demonstrate our ongoing support and collaboration with our existing and new business partners.