There are pockets of overheating in central European property prices, but real estate executives and bankers in the region believe continuing domestic demand and economic growth will support the wider market.
Property executives see hot areas in residential building, in some countries such as the Baltics and in touristy areas, but believe there is no bubble in sight for offices, retail property or other commercial estates. "In commercial property, we are still slightly to substantially below western European levels," said Karl Petrikovics, chief executive of Austria's Immoeast (IMEA.VI: Quote, Profile, Research), one of continental Europe's biggest property firms. "In residential property, there may be some overheating in certain specific areas. But in general, based on economic forecasts, I'm very optimistic for real estate," he said at the Reuters Central European Investment Summit. Warimpex (WXFB.VI: Quote, Profile, Research), a Vienna-based developer specialized in hotels in central Europe, sees no impact of the credit crunch on real estate developers in the region. "For existing property I don't see much risk... For the near future I don't see any negative impact (of the credit crunch)," Warimpex Chief Executive Franz Jurkowitsch told the Summit. UK-OWNED HOLIDAY HOMES Speakers at the event agreed those most at risk were investors, largely British, who have ploughed money into holiday developments in Black Sea coastal areas of Bulgaria and Romania, with the Baltic states also seen as a possible "bubble". "Maybe Bulgarian holiday homes bought by UK residents, those are a bit on the speculative side. They may end up being worthless if (the) market collapses. But around big cities, urban areas, residential should grow," said Willi Hemetsberger, head of global markets at Unicredit (CRDI.MI: Quote, Profile, Research). This was echoed by Patrick Butler, chief financial officer of Raiffeisen Zentralbank, who said British investors could see their own finances put under pressure by higher UK interest rates and financial institutions being less willing to make large loans to value for second and third homes. But along with others, Butler pointed to the underlying demand for investment in central and eastern Europe and the aspirations of people who until recently had not been able to own real estate, and particularly their own homes. IMF regional representative Christoph Rosenberg warned of the dangers of a rise in private sector lending in the region, specifically in mortgage lending. "That has fuelled a real estate boom, in some cases we can safely say a bubble," Rosenberg said. The IMF warned in its World Economic Outlook on Wednesday that housing booms in emerging Europe, if they suddenly ended, were a risk for growth. OTP Bank Chief Financial Officer Laszlo Urban, who also highlighted Romania and the Baltic countries as areas where the residential real estate market had become overheated, warned it was hard to separate scarcity of supply from a bubble.
Source: Reuters
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