Guardian: Funds looking at emerging Europe again – systemic risk “over”

Nothing like some good news to start your weekend. In an unusually positive report, yesterday’s Guardian carries a relatively sunny article about the prospects for the CEE property market. (Note also how the paper solves the annoying British media habit of calling everything west of Frankfurt “Eastern Europe”)

Global real estate investors who fled emerging Europe at the start of the year are inching back to the region, lured by prospects of higher returns as fears of widespread economic collapse ebb.

Emerging real estate markets such as Poland, whose economy has held up relative well in a global downturn, and Russia, which is bolstered by rising crude oil prices, are becoming attractive, but Hungary and the Baltics remain no-go zones.

The main source for the article is Karsten Junius, head of research for Deka Bank. “We’re coming out of a period where no one wanted to do anything as systemic risk in the whole region was extremely high … that period is clearly over.”

Impressively, the Guardian bothers to get some local talent to weigh in on the issue. Jos Tromp, for example. “There is still a belief that in the medium to long term, there will be a lot of growth in this region,” says CBRE’s head of CEE research, who adds that in addition to opportunistic investors, core buyers are sniffing around again.

The paper even sources Tomasz Trzoslo, JLL’s head of capital markets for CEE, who says what many have been warning for some time now. “If you can buy in London for 6-7 percent, why buy in Central Europe? Central Europe needs to trade at a yield premium — my guess about 150-200 basis points.”

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