One in four Central European developers declare that in 2024 it will concentrate its activities in the new sector of the market, most often it is mixed-use projects and apartments for rent. In addition, development companies are much more optimistic than a year earlier: 40% of them predict an increase in overall market activity, according to the Real Estate Confidence Survey for Central Europe 2024, prepared by Deloitte.
“One of the most significant trends among developers in 2024 may turn out to be a change in the main branch of activity. One in four respondents declares that it will move its attention to another area in the coming months. The trend towards change is the strongest among office and retail developers – respectively, three out of four and every second one declares a focus on other sectors in 2024. The respondents want to focus most often on mixed-use projects and apartments for rent” according to the intro to the report.
“This is one of the most interesting trends observed in our study this year. On the one hand, it results from a reduced interest in specific asset classes such as offices or shopping malls. On the other hand, it can only be a temporary strategy for the survival of difficult times,” commented the head of the real estate advisory team Deloitte Dominik Stojek.
In terms of investment opportunities, the most attractive is still the considered warehouse sector. The housing industry is also growing in popularity among both developers and investors, and the PRS sector (institutional lease) is also promising. More than 60% of developers plan to sell projects immediately after their completion, similar declarations in the last quarter of 2022 were made by a record few (27%) of respondents. Reversing this trend is a signal of a return to a more proactive attitude in the industry. This change is particularly visible among residential developers, as many as three-quarters of them plan to quickly sell completed projects, also reported.
Developers list various challenges they will face next year. The issue of financing is considered to be the most important, one of the main objectives was to secure parcels for the time of economic recovery (23% of the responses). In this area, the Polish market is in a special situation due to the amendment to the Act on Planning and Spatial Development of July 2023, which in pessimistic scenarios may reduce the number of available plots for development, according to the report.
“The audits of the study participants on the investment are polarized, but show much greater optimism than in the last quarter of 2022. A year ago, only 16% of respondents expected an increase in the volume of transactions, currently as many as half of them look positive about this issue. Almost a third of respondents predict that investments will be at the same level, the decline is estimated by only 19% (compared to 51% in 2022). It is worth adding that in retrospect the forecasts presented in the previous editions of the Deloitte report turned out to be very accurate, which makes the study a reliable material in the context of market predictions.
A record-high (64%) of respondents believe that the availability of investment products will increase in the next three years, and only 8% are the opposite. The best mood in this matter is presented by respondents from Poland and the Czech Republic – respectively 71 and 74% predict increased access to investment products. Almost half of those surveyed expect the availability of debt financing in the coming months to remain at a similar level as it is today. It is believed that the industry will face another difficult year in terms of obtaining financing.
Compared to previous editions of the report, Polish respondents show very high optimism in terms of tax climate, as many as 40% of respondents believe that tax conditions will improve. In turn, respondents from the Czech Republic approach the subject of taxes pessimistic, almost half predict a deterioration in the coming months. A look at the results of this year’s survey generally suggests gradual positive changes and growing dynamics in the real estate market,” Stojek added.
The Deloitte Real Estate Confidence Survey for Central Europe is published annually. The study was conducted in December 2023. The survey was attended by members of the management boards, managers and specialists in the real estate market operating primarily in Poland, the Czech Republic and Hungary, as well as throughout Central Europe. The questionnaire consisted of two parts. The first focused on respondents’ opinions on specific aspects of the general economic conditions in Central Europe in 2024. The second concerned the individual business perspectives of each participant.
Source: Deloitte and ISBnews
