commercial real estate investments are still growing, banks want to finance them
Commercial real estate investments are still growing, banks want to finance them
| April 26, 2019
Banking institutions continue to offer investors attractive real estate financing conditions in Slovakia and across Central Europe region. The appetite of banks to finance investments remains strong as claimed by debt and structured financing experts from real estate consultancy CBRE.
Western European commercial property prices are currently at record highs. The chances of further price rises are possible only if government bond yields fall even deeper below zero percent.
“Real estate prices in Central Europe are also at record levels. Yet commercial property yields in Slovakia are 2-4 percent higher in the US than in the western part of Europe, which adds to the attractiveness for investors,” says Juraj Bielik, Director of CBRE Debt and Structured Finance. At the same time, he points out that investment properties in the most attractive markets of the Central European region, i.e. Poland and the Czech Republic, are almost sold out and global capital must also explore historically less attractive markets, which were considered riskier in the past.
"Demand for high-quality commercial real estate continues to outstrip supply, causing a continuous compression of investment yields, while pushing the property prices higher," says Bielik.
CBRE experts also argue that banks perceive the current economic situation in CEE region still very positive and that global indebtedness and potential risk indicators in Central European countries are staying at healthy levels. According to CBRE consultant Stanislav Carnogursky, the risk - yield - liquidity ratio in Slovakia is one of the most attractive for investors in the whole Central European region. “Central Europe, and specifically Slovakia, also offer the same quality investment products as Western Europe, but the difference is in market liquidity. This means that investors in our country must be prepared for a slightly longer period of acquisition or disposal of the real estate investment.”
Among the countries, which have recently been hit by record levels of investment in real estate business, are France, the Netherlands, Poland, Portugal and Spain. The last two countries registered even more than a 50% increase in investment volumes compared to 2017 (ESP 56.9%, POR 51.4%). Spain has done well especially at the end of the year, when several major business acquisitions were closed, including the American fund Blackstone, which bought Hispania and acquired a majority stake in Testa. High investment volumes were reached in Germany, especially in the second half of the year 2018. Up to 77 billion euros were invested in commercial real estate, an increase of 5.9% over 2017.
The Slovak real estate market also achieved very good results over the last year. However, CBRE expects the record amount to be reached during this year. "While real estate transactions amounted to more than € 800 million (exactly € 825.53 million) in Slovakia during the last year, we expect up to € 1 billion this year," said Anthony Selman, CBRE Investment Director in Central and Eastern Europe. And that is the good news for investment loan financing professionals.
CBRE's expert team in Bratislava helps investors acquire funds to buy or develop commercial real estate within the whole Central Europe region. "We monitor the commercial real estate market, have an overview of financial markets, analyse existing and new real estate investments, optimize funding structure, and ultimately combine supply and demand for money in various forms - credit, bond, mezzanine, own resources. Thanks to all this, we look forward to respect in financial institutions not only in Slovakia but also in neighbouring countries,” concludes Juraj Bielik.
CBRE prepares aid for investors every year, a so-called "Debt Map". Debt Map that helps them identify all the market-relevant external financing data to finance their future investment projects.