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Real Estate Industry: Major Losses for Properties In CESEE

Published: May 6, 2013; 13:42 · (Vindobona)

According to Manfred Wiltschnigg, CEO of Austrian Real Estate Agency Immofinanz until the end of March, investments in Poland are becoming more risky.

Real Estate Industry: Major Losses for Properties In CESEE / Picture: © Vindobona.org

Properites in CESEE countries have become financial pitfalls. Investors – among them many Austrians do not seem to have a chance of getting out of the misery. There is still a boom in real estate investments in Poland. However, there is a slow but steady reversal in trend. Wiltschnigg, former CEO of Immofinanz, explains that there is dangerous development in Warsaw. Because of the oversupply of office spaces and the development pipeline of several hundreds of thousands square metres flats of all kind could soon be rent with significant price reductions only. Wiltschnigg forecasts the vacancy rate to significantly augment. The former CEO continues to explain that Poland was a big and densly populated country with a strong domestic economy. However, the elimination of important special effects because of the Euro 2012 particularly in the sector of innovation of infrastructure as well as the current insignificant role of Poland as hub for Baltic States, Belarus and Ukraine would all lead to a “noticable weakening of the economic development”.

Apart from Poland real estate businesses are not attracted by CESEE countries, which could lead to long-term losses for the markets. Wiltschnigg decribes the investment market in some CESEE countries to have almost come to a standstill. This fatal circumstances concern many Austrians as well as their CESEE properties have become practically unsaleable. If sustainably financed the real estate agencies are compelled to keep the properties. “Whoever is stuck in countries like Ukraine, Romania or Bulgaria will hardly get out without major losses”, Wiltschnigg predicts.