With Real Estate investment volumes approaching EUR12bn projected for 2017*, the CEE region is coming of age in investors’ eyes. It has become an appealing and credible alternative market place for Real Estate opportunities and, being backed up by growth that is for the first time exceeding EMEA, investor sentiment is highly buoyant.
Whilst institutional investment in the region into PBSH remains low (to non-existent), it is hard to calculate firm yields but commentators are flagging up premiums in the 3 – 4% range over that obtained in Western Europe equivalents. Added to the clearly positive support governments are giving to their universities in attracting new students, it makes for a very rosy picture going forward as the asset class’ fundamentals offer great prospects.
It is the First Mover advantage we are very keen to promote as we are seeing a wave of buying spreading across the European continent – its relentless motion is certain to reach Central and Eastern European “shores” quite soon. We see great opportunities here for those ready and willing to share our enthusiasm.
We are of the opinion that 2018 will mark a change for the region as PBSH investors turn their attention eastwards.
Of particular appeal, is the lower development costs that we are seeing in projects our partners are planning – this provides for smaller, “bite sized” commitments that permit investors access to World Class opportunities that elsewhere, may have eluded them. Combined land and building costs, per bed, are often 50% of those observed on more mature markets. Whilst local building regulations are stringent, local authorities keen to attract new investment have a can-do, let’s-work-together attitude.
It is also the overwhelming scale with which global businesses such as Amazon have announced their arrival in the CEE scene. We have visited the region for ourselves, and on a recent visit to Poland, we were enthralled by the sheer scale of the Amazon fulfilment centres located close to the country’s main arterial highways.
Other logistics mammoths, IT global leaders and international businesses are choosing the region to expand their pan-European operations. Not only will this swell the government coffers and increase investor awareness, it will also attract the skilled workers from outside the region that are part of the likely demographic for Co-living – the alternative and complementary aspect to Student Housing.
While other countries wrestle with either growing or maintaining their Knowledge Economy’s status, the CEE region, as a natural part of their expansion, are attracting students from China, India, Turkey, the Middle East and other countries. They are offering increasing numbers of courses in English, financial support in some cases, and employment prospects after qualification for those wishing to settle there.
The region is most definitely, open for business.
* Colliers International 2018