Investors eye a new market in Central Europe: homes for rent

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With rising interest rates and limited supply putting home ownership out of reach for a growing number of people in emerging Europe, global and local real estate investors are placing bets on the region’s nascent private rented sector. | Reuters

Investment in the sector, mainly in Poland and the Czech Republic, jumped 38 percent to 130 million euros in the first half of 2022, according to a CMS and CBRE report.Denmark’s NREP entered the Polish market in 2021 and plans to invest some 500 million euros in the residential and logistics sector over the next three years, with projects in major cities such as Warsaw, Wroclaw, Gdansk and Krakow.

“We are currently surprised ourselves by the speed of the change and how the market is changing,” he told Reuters.“We believe over the next 10 years two-thirds of the apartments built in this country will be sold to funds like ours and only one-third sold to homeowners.” “There is a huge gap in things such as quality, stability and predictability of leases between private landlords and institutional players,” Marek Obuchowicz, a partner at Griffin Capital Partners, told Reuters. “This makes for an attractive entry point for PRS players.”A traditional preference in the region to own rather than rent has been challenged by the huge run-up in home prices since the 2008 financial crisis, fuelled by economic growth and a decade of rock-bottom mortgage rates.

Demographic change is another factor. Immigration to Poland both before and after the war in Ukraine has exacerbated housing shortages, as has a business services boom attracting foreign workers who demand higher-quality flats, added Wysokińska-Kuzdra, a senior partner at Collier’s in Warsaw.

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