The CEE property market is fundamentally positive after the UK leaving the EU; probably because the players think Brexit is the problem of the UK and hope that finally it will find its own solution.
After Brexit, the free movement of labour, access to resources and the application of EU law will stay in the relationship between Great Britain and the EU, equivalent to what exists in relation to Norway, Iceland and Lichtenstein. In another angle, GB will rather follow Switzerland’s example, i.e. it will have a looser co-operation with the EU.
Positive impacts of the Brexit
One of the positive outcomes of the Brexit is that it can direct attention to the current problems, such as the need to support those that lose on globalisation and that reforms are necessary in join commitments. Reforming the budget could grow property market transparency, as a result of which the real estate market may become more transparent too.
The global real estate market in 2017
The volume of real estate investments was growing continuously until 2015 after the crisis. The first change of direction came about in 2016 which was the first year when investment volumes declined in each segment of the real estate market on a European level. While growth was recorded in CEE and in most of the northern countries, the average was ruined by the negative figures in the largest economies.
Radek Zeman, chief financial officer at CTP is optimistic also about the Hungarian market. He considers Hungary to be the last country in the CEE region where people can still make money, namely, where considerable yields can still be achieved on the real estate market. He thinks, however, that in parallel with the stabilisation of the market here yields will drop. Peter Attard Montalto, chief analyst and chief economist at Nomura, also projects a moderate impact from the Brexit on CEE economies.
The rising role of the real estate market within the world economy is attested by the fact that its share rose to over 10% from 8-9% over the last few years. Low bank interest rates and relatively high yields on real estate markets property has become an increasingly attractive investment target.
Technology and real estate
Technological development is already making a huge influence on the region’s property market. A total of USD 5 billion has been invested so far into technological investments relating to the real estate market globally, said Joseph Kelly, chief executive of DealX. The local office market may benefit from the outsourcing of the workflows at international companies, so in this respect CEE is expected to make further progress. But he emphasized manpower shortage as a problem for almost each economy in the region.
Those who choose migration take this step towards the west not only because of higher wages, but not only these; they also need an environment with better living standards - health care, education and more up to date neighbourhoods. Employees will have more complex requirements in the future, thus, retaining labour force can be facilitated by setting up new creative neighbourhoods, ”smart cities”.
In the previous post we examined the questions we know and don’t know the answer about the effects of the Brexit.