CEE Real Estate Rebalanced: Infrastructure readiness and bespoke deal-making

Macroeconomic Rebalancing and Regional Growth Cycles

The Central & Eastern European (CEE) real estate market is stepping into a fresh investment cycle, propelled by the gradual stabilisation of broader macroeconomic conditions across the region. 

Moderating inflation alongside settled long-term interest rates - aligning near central bank targets such as 2% - have fostered a far more supportive backdrop for strategic capital deployment. 

This financial recalibration has successfully re-established a favourable leverage gap relative to prime asset yields, encouraging institutional equity investors to return to the market. 

At the same time, persistent geopolitical volatility is no longer viewed as a temporary disruption, but rather as an ongoing market reality that regional players must actively incorporate into their long-term risk strategies. 

Within this evolving framework, key regional economies have expanded rapidly, securing places among the world's top 20 economies by integrating into international supply chains, shared services networks, global research facilities, and critical digital infrastructure.

Digital Infrastructure and the Power Bottleneck

Accelerated digital transformation and the widespread integration of artificial intelligence (AI) have elevated digital infrastructure into a core asset class across CEE markets. Modern economic expansion is increasingly AI-driven, making high-performance computing capabilities and continuous data connectivity vital metrics of national competitiveness. 

Data centres currently account for approximately 1% of total power consumption, a figure set to rise rapidly as hyperscale deployment accelerates. 

Facility location remains tightly bound by latency demands, where operational thresholds such as 18 milliseconds in Amsterdam or 20 milliseconds in Paris establish standard requirements, obliging operators to place infrastructure near core business hubs.

Consequently, power availability has replaced land access as the primary constraint on new developments. 

This has led real estate developers and operators to shift their acquisition strategies and directly engage grid operators to secure high-capacity connection nodes exceeding 500 MW before acquiring land rights. 

Substantial state-led energy transition investments, including national grid programmes reaching EUR 270 billion in Poland alone, are proving essential to fast-track permitting and avert energy shortages.

Municipal Integration of Data Centres

Alongside digital growth, environmental integration and active community dialogue have become pivotal prerequisites for successful project execution.

A frequent hurdle facing large-scale digital and industrial developments involves local public perception, where concerns regarding sound emissions, excess heat, and heavy traffic can spark local opposition, making public education and local authority alignment essential to demystifying daily operations and building productive relationships. 

Furthermore, integrating facilities into local municipal infrastructure offers major sustainability gains; for instance, capturing excess heat from data centres and routing it into urban district heating systems could provide up to 50% of the winter heating requirements for major capital cities. 

However, capturing these circular energy opportunities requires dedicated investment in municipal piping networks and coordinated urban planning between local authorities and private developers.

Logistics Demand and Expansion

Concurrently, the logistics sector is experiencing structural shifts in tenant demand and expansion strategies. 

Recent market activity reveals a heavy reliance on existing contract renegotiations, which accounted for approximately 70% of leasing volume compared to just 30% from new market expansion. 

Occupiers are exercising heightened caution, prioritising operational efficiency over physical expansion or postponing relocation plans. 

Development remains constrained by the limited availability of prime urban locations and adequate power grid connections, placing a distinct premium on speculative projects situated in top-tier logistics hubs. 

Even so, prime rental growth has held positive at approximately 2% annually, supported by new demand drivers such as defence manufacturing, high-tech production, and specialised logistics operations.

Regulatory Friction and Operational Challenges

Navigating the regional landscape requires balancing administrative agility against tax and legal complexities. 

On the administrative front, pre-development and permitting procedures across CEE jurisdictions often demonstrate impressive speed, flexibility, and municipal willingness to collaborate when compared to Western European markets. 

This agility allows developers to underwrite projects with predictable timelines, a framework further formalised by updated spatial planning acts and master planning rules. 

Conversely, operational challenges persist due to shifting administrative tax interpretations. Sudden changes in tax authority enforcement regarding withholding tax, value-added tax assumptions, and cross-border holding structures introduce friction into transaction workflows. 

To manage these enforcement risks, institutional investors are increasingly reorganising holding entities, seeking formal Ministry of Finance guidance, and utilising tax indemnity insurance policies.

Evolving Capital Pools

Ultimately, the evolution of CEE's real estate markets underscores a market shifting toward granular, bespoke deal-making. 

The legacy model of undertaking speculative developments based on broad market averages has given way to rigorous, project-specific underwriting. Transaction terms, lease arrangements, and commercial terms are now explicitly tailored to individual asset realities. 

At the same time, capital sources are undergoing structural diversification. With traditional core institutional equity providers - such as large German pension funds - adopting a cautious stance, market players are tapping alternative liquidity. 

Capital is increasingly coming from private wealth management networks, family offices, specialised individual investor funds, and regional real estate investment funds. 

Coupled with stabilised debt costs and lower interest rates, this broadening capital base positions the region at the beginning of a dynamic new growth cycle centred on specialised assets, sustainable infrastructure, and agile execution.

► Access more insights in the CEE GRI 2026 Spotlight report
 

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These insights were shared during industry leader discussions at Women Leading CEE Real Estate 2026, co-hosted by Addleshaw Goddard and featuring contributions from moderators Ewa Sinkiewicz and Zuzanna Lipska (Addleshaw Goddard), along with Dorota Latkowska-Diniejko (REINO Partners), Joanna Sinkiewicz (Accolade Group), Magdalena Uler-Kłeczek (7R), and Sylwia Pyskiewicz (Equinix).

► Don’t miss Women Leading European RE 2026 - Summer Edition in Paris on 9th September

► Continue the discussion at regional panels during Europe GRI 2026 - Incorporating Hospitality on 9th-10th September in Paris