“Caution is advised in some secondary locations in Central European markets, as the performance of some developments suffers from a poor concept. Among the places to avoid are cities with little infrastructure and highway access,” writes the PwC Emerging Trends in Real Estate Europe study.
Bucharest is undersupplied with modern offices, found the researchers. But the shortage of product has pushed yields down to levels that make an investment unattractive to some investors, according to the findings of the study.
Spain tops the list of countries for real estate investors to avoid, and the findings of the study have been recently confirmed by Spanish developer's Martinsa Fadesa's financial difficulties.
For the time being, the best bets for real estate developers and investors are mixed schemes. Urban renewal schemes and regeneration projects are among the most favored projects by developers and have excellent prospects in Central and Eastern Europe.
Most Central European cities have extensive, run-down industrial and residential areas in central locations. Mixed use will be an investment trend that will encompass a wide range of different uses, including leisure, say the PwC and ULI pundits. The only country in which the study recommends avoiding this kind of project is Russia. “Urban regeneration in Moscow and St. Petersburg is hardly moving, because of the lack of strategic vision and dogmatic preservation policy as well as corruption.”