Can Poland and the Czech Republic maintain CEE real estate dominance?

► CEE Market Landscape

Poland and Czech Republic are dominant players in the CEE region, contributing significantly to the overall volume of transactions. This was also a notable conclusion from the latest GRI Barometer, which saw Warsaw jumping from seventh place in our previous poll to joint fourth today.

However, there is a noticeable gap between the two markets. While Poland has a larger and more diverse property market, the Czech Republic, although smaller, has a high level of liquidity due to local capital. 

Despite this, Poland remains the largest market in terms of size, with a substantial number of regional cities driving investment activity.

Romania is also emerging as a key market, but it is still lagging behind Poland and the Czech Republic in terms of investment activity, largely due to challenges related to local capital and liquidity.

► Market Volatility and Local Capital

The capital markets in Poland have been described as volatile, especially in light of external economic factors such as interest rates and the influx of international capital. 

There is a lack of stability that is making it harder for international investors to commit to Poland as they would in more stable Western European markets.

The Czech Republic is a more domestic-driven market, with local capital providing significant liquidity. This has made it a safer bet for investors in uncertain times, although the market is challenging for foreign capital due to the dominance of local funds.

► Investment Focus and Asset Classes

Residential Sector

The residential sector in Poland and the Czech Republic shows potential, particularly for affordable housing and rental units. However, investors are wary of residential projects due to the significant costs associated with construction, land acquisition, and legal complexities. 

The residential market has not yet matured sufficiently to provide stable returns, although some developers are making headway with institutional rental schemes (PRS).

Office Sector

There is general reluctance to invest in office spaces outside of prime locations, particularly in Warsaw, where the market is described as "dry," with very few new developments. 

Developers are increasingly reluctant to engage in speculative office projects, opting instead for pre-let developments. The market is also facing challenges with the risk of tenant turnover and high tenant improvement (TI) costs, which are diminishing profitability.

Retail

Retail is attracting attention for its potential, especially convenience retail. Developers are finding this market less capital-intensive and more cost-effective compared to large shopping centres. 

The trend in Poland and other parts of CEE is shifting towards non-shopping-centre retail, which is gaining traction across Europe.

Logistics

The industrial and logistics sector continues to be a strong sector in Poland due to its strategic location, robust demand, and significant supply of land for development. 

The market has stabilised, and despite the high volume of space already developed, there is still growth potential. However, high construction costs and competition from more mature markets present challenges for future growth.

► Investment Strategies and Risks

There is a strong focus on total return strategies, with investors looking for high returns through appreciation and rental income. However, in Poland, investors are finding it harder to achieve the same yields as in previous years due to inflated land prices and market saturation.

This also highlights the importance of understanding market cycles and risk management. Many investors are finding it challenging to scale up operations, particularly in the residential sector, due to regulatory frustrations and financing constraints. 

The question of whether to invest in newer or secondary properties also arises, with a general preference for established properties with a strong rental yield rather than speculative developments.

► Regional Trends and Future Outlook

There is an increased interest in CEE real estate, particularly from US private equity, Middle Eastern investors, and South African funds. These investors are focusing on retail and logistics, and they bring a new dynamic to the market with longer-term investment strategies and more capital availability.

Although CEE real estate is expected to become more active, particularly in markets such as Poland, Czech Republic, and Romania, the growth potential will largely depend on the macroeconomic environment, the stability of local currencies, and the ability to secure financing under favourable terms. 

► Conclusion

The Central and Eastern European real estate market is at a crossroads, with some sectors showing resilience while others face significant challenges. 

• Poland remains a dominant force but is grappling with a lack of liquidity and fluctuating capital markets. 
• The Czech Republic, with its strong local capital base, offers a safer environment for investment, but foreign capital faces challenges in entering this market. 
• Emerging markets such as Romania show promise, but they need to overcome liquidity and local capital issues.

Investors are advised to be cautious, adaptable, and patient, as the region’s market continues to evolve with new players, emerging sectors, and shifting economic conditions.
 

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These insights were shared during the GRI Institute’s CEE & Poland Real Estate 2026 Forum - London Edition. Thank you to our co-hosts, Gleeds, and all participants for their valuable contributions to the discussion.