Based on data from the latest Knight Frank Active Capital 2023 report, we predict that the level of cross-border flows in 2023 will return to those recorded in the middle of the previous decade. However, if the residential sector maintains its current pace of development, the value of transactions could increase. Of all the real estate sectors, investors will be most likely to choose office, warehouse, residential and retail, and direct their investments to the United States, the United Kingdom, Germany, Australia and France. The largest sources of capital will be the United States, Canada, Singapore, Germany and the United Kingdom.
The value of investments coming from the EMEA region will be 15 percent in 2023, but capital that flows to countries in the region will account for 55 percent of all capital flows in the global real estate market. We estimate that the office sector could account for 48 percent of the total, followed closely by the warehouse, retail and residential sectors.
“We estimate that capital, comprising half of global investments, will be located in the EMEA region. In particular, German institutional investors and capital and investment management companies will be active, as well as Swedish and British capital and investment management companies. The aforementioned players will be particularly active in the British, French and German markets,” – comments Victoria Ormond, Partner, Head of Capital Markets Research.
She adds that “the proximity of the war in Ukraine, double-digit inflation and the need to assume the risks associated with investing in this part of Europe means that the CEE region has an uncertain year ahead. Taking into account economic and financial forecasts, our model predicts that the office sector in Poland will be the main destination for foreign capital investment in CEE in 2023. Investment and capital management companies from the Czech Republic, Hungary and Austria, as well as German investors, see potential in it due to the relative liquidity of the market and the profitability of real estate in the region. The office sector will become the primary real estate segment for investors, but the warehouse market in Poland and the Czech Republic will also be attractive to U.S. capital looking for price bargains.”
“In addition to investors from the Czech Republic and Hungary, who have been active on the Polish real estate market for several years, we also see considerable activity from funds from Lithuania and Israeli capital. The former group has been intensively analyzing the Polish real estate market for several months, so we expect the first purchases in the near future. On the other hand, we see that capital from Western Europe is currently concentrating on domestic markets, due to the possibility of buying attractive properties in great locations, providing stable cash flows at a significant discount.” – Michal Grabara, Director, Capital Markets, Knight Frank, adds in detail.
