SEE - The Next Hotspot For Real Estate?

 

GRI Club members met for the first time in Romania this week to discuss real estate in Southeast Europe.

The Bucharest meeting gathered some of the leading figures from the region as they weighed up SEE as potential hotspot for investment and analysed obstacles facing investors. While the meeting focussed on the region in general, much of the conversation looked at Romania and Bulgaria as two of the more attractive markets in the territory.

Higher yields

Constituents agreed that capital is seeing a shift from Western Europe to Eastern Europe due to the attractive yields on offer. Particularly in the SEE region where investors, who had previously been hesitant, were now committing capital to countries like Romania and Bulgaria.

Infrastructure a big stumbling block

Amongst the biggest challenges facing investment into the region is the poor state of infrastructure. It was pointed out by members that Romania's insufficient infrastructure and increased construction costs are stumbling blocks. Connectivity to the rest of Europe is stunting growth in terms of the country realising it's full investment potential.

A need to develop local capital markets

While there has been a considerable increase in domestic capital in the Romanian market, the consensus is that there is still a long way to go. Attendees felt that the government needs to do more in order to improve the legislative process to encourage local capital investments.

Countering the brain drain

The lack of an educated labour force due to the brain drain suffered by Romania is a concern in terms of attracting investment as economic migration continues. While the government has introduced initiatives to counter this, especially to retain IT workers, the lack of skilled labour is still a concern for many. However, one member felt that the onus was with the private sector to take the initiative in order to improve the current situation.

Co-working and other trends gather pace

While the SEE region still has some way to go, co-working and flexible office spaces are slowly changing mindsets in the region. Smaller brands are enjoying relative success as demand continues to increase with a growing IT labour and some members see massive potential for growth.

Increased liquidity

Increased liquidity in the SEE market has created a buzz amongst investors. As the pipeline for 2018 continues to soar, a lot of optimism currently exists in the market with a lack of liquidity no longer seen as an obstacle to attracting foreign capital.