Deloitte study: real estate companies in Central Europe expect higher investment and increasing market activity this year. Industrial sector remains the most competitive

Half of the real estate companies in Central Europe (49%) estimate investment to increase this year and only 19% expect a decrease (down from 51% in 2023), amid improving perception of growth potential in the market, according to Deloitte 2024 Real Estate Confidence Survey for Central Europe. Moreover, 40% of respondents anticipate market activity to increase this year, up from 15% a year ago, while the proportion expecting a decrease has fallen to 16%, from 57% in 2023.

In this context, investors intend to focus on new investments (31%) or on raising funds for future projects (19%). One in three expect the efficiency of their portfolio to improve, two times more than those who expect it to deteriorate. The industrial sector is still perceived as the most competitive (31%), followed by residential (21%).

Among developers, reprofiling seems to be the most important trend in 2024, as one in four consider such a change. This trend resonates the strongest with office and retail developers, where three in four and respectively half of the respondents expressed their intention to also focus on other sectors in 2024 (mainly mixed-use assets or residential projects for rent). Among the challenges to be faced by developers this year, the study indicates financing (26%), followed by plot acquisition for future developments (23%) due to the economic recovery prospects, and commercialization (18%).

"The slowdown in office market sector is also noticeable in Romania since 2023, and the deals in progress mainly concern the lease agreements renegotiation, with a focus on making the terms more flexible or extending the contract period. However, in terms of retail projects, the local market differs from the regional one, given the large number of ongoing projects and increased appetite for investments in this segment, stimulated by the lower inflation prospects and, implicitly, by the increase in the purchasing power across the country. The industrial segment benefits from growth prospects, due to the geo-political situation, to the low availability of such premises at national level and to friendshoring - the global and regional trend consisting of relocating or establishing production units in countries regarded as political allies," said Irina Dimitriu, Partner at Reff & Associates | Deloitte Legal and Real Estate Industry Leader at Deloitte Romania.

Deloitte has been conducting the Real Estate Confidence Survey for Central Europe since 2019 to find out how professionals in the field perceive the market. Three groups of stakeholders participate in the survey - developers, investors, and market advisers. In the 2024 edition, the most respondents came from Poland (33%), the Czech Republic (24%), Hungary (10%), while 24% operate across Central European markets.

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