Moderator Robert Miklo, Director for Investment Services at Colliers, opened the discussions of the Primary and Secondary Investment Markets panel held at CEDER 2024 by asking the panelists where they saw themselves in the market at the current moment.
Doron Klein, Deputy CEO of AFI Europe & CEO of AFI Europe Czech Republic & Romania, shared an optimistic view. He said: “We see ourselves as long-term investors who are still developing our pipeline. (…) I think that where we are today is less relevant, because (…) during the time curve, the yields are going up and down, interest rates are hiking up and down. And I think that for us, the quality of the assets [is more important], (…) investing in the tenants on a long-term perspective. And I do believe that eventually you will find yourself in the right part of the curve.”
He continued by saying that AFI was in a good place when looking at asset performance in all segments, meaning office, retail and residential, across the CEE region. Regarding the office market specifically, he said: “I think that this year we will be the only office supply to be delivered to the Bucharest office market, which will be the AFI Loft project on top of the Cotroceni shopping centre, 15,000 square meters of GLA. And we’re planning two new developments, to be launched this year in Bucharest and in Brașov. So, we’re not standing still.”
David Hay, Founder & CEO of ADD Value Management, was less optimistic, at least for the short to medium term. “For the majority of investors at this moment, offices are a no-go area. All major institutional investors are increasing their office exposure by 30% to 40%. The market will be or is some places already flooded with offices.” He added that refinancing of commercial real estate in the future will be a serious problem, especially for the older A-class and B-class buildings. When adding the new ESG requirements, which he described as unreasonable for older buildings, and the reduction of office spaces by big companies, the result will be, in his opinion, a very challenging environment for the office market for at least five more years.
João Saracho de Almeida, Managing Director of Solida Capital Europe, on the other hand, had another positive point of view to share and confirmed that, for investors with a long-term strategy, the market has plenty of opportunity. He said: “This current context of events, interest rates, tenants, all these external factors of AI and home office and so on, this represents an opportunity. (…) At least from our perspective, where we are looking for some opportunities of creating and adding value to some assets.” He mentioned that he was seeing signs of improvement on the market: “Even if you look back in history, there hasn’t been a cycle that would last for six, seven years.
Let’s not forget we are in this cycle already for two years, that [the] office sector is so negative. (…) We believe that there will be a faster recovery.”
