By Yi Whan-woo – The Korea Times
Korean real estate investors are rushing to the Central and Eastern Europe (CEE), thanks to favorable exchange rates and higher yields than other regions, according to the Polish Investment and Trade Agency Seoul Office last week.
It said the Korean investors have outpaced Germans and emerged as “the most active group of foreign buyers of commercial real estate in CEE” with an investment of more than 1 billion euros in the first half of 2019.
“Asian investors, and particularly South Koreans, have really made their presence felt in the CEE,” David Dixon, a partner at the Warsaw branch of multinational law firm Dentons, said in a press release from the Polish Investment and Trade Agency Seoul Office.
“Favorable exchange rates and higher yields in CEE, coupled with the availability of first-class office buildings and logistics developments should continue to stimulate Asian investment in the coming months.”
The Korean presence is a part of the growing Asian investment in the CEE real estate market.
Asian capital invested directly in commercial real estate in CEE since 2013 totals 7.7 billion euros.
The share of Asian capital in total investment volumes in the whole of Europe was 14.5 percent.
The office sector is the main attraction for investors, with the supply of such buildings in major CEE cities doubling over a decade to 21.8 million square meters.
Projected development completion is anticipated to boost stock by 20 percent by 2021.
Under the circumstances, the office sector attracted 6.5 billion euros in 2019, up 30 percent from 2018.
Office market growth in the region is linked to economic development of the cities.
CEE cities are among the fastest growing in Europe, with 16 of the 20 best-performing European cities, according to the CEE Investment Report.
“When comparing business opportunities and risk-adjusted returns, Warsaw, Prague, Budapest and Bucharest have never been closer to Milan or Berlin,” the Polish Investment and Trade Agency Seoul Office said. “The report provides a comprehensive update on the development of the leading cities in the region, which have undergone profound economic and social transformations in recent years.”
Jang Hyon-suk, executive managing director at Korean real estate investment trust JR AMC, said his company would expand acquisition of core office properties in well-established CEE sub-markets.
“With yields in Western Europe breaking historic records, the CEE has become a very appealing substitute whereby high yields can still be achieved, simultaneously minimizing any trade-off in building quality or macro risk profile,” Jang said.
At the same time, core CEE cities such as Warsaw, Budapest and Prague were growing strongly to become serious competition for traditional Western European cities.