Up to 70% of investments in 2023 went to office buildings, logistics once again broke rental records.
The real estate market in Slovakia, like other areas, was influenced by several factors last year. This time, too, he was influenced not only by the war in Ukraine, but also by the related high energy prices, inflation and a significant increase in interest rates. However, according to the current data of the global real estate consulting company CBRE, we managed to deal with this difficult situation solidly again.
How much was invested in real estate in Slovakia in 2023, how did individual segments of the real estate market fare, how do we compare with neighboring countries and what do the experts' predictions look like for 2024? This was also revealed by the latest Real Estate Market Outlook 2024 report.
The fact is that in 2022, the largest amount of investment in history was invested in the Slovak real estate market. Therefore, it is no surprise that CBRE experts predicted that investment volumes will decrease in 2023. However, they predicted a very strong year for the office real estate segment. According to current measurements, the company's assumptions were confirmed.
"In 2023, a total of 664 million euros were reinvested in Slovakia. Although this is a 41% year-on-year decrease, Slovakia is still an attractive destination for investors. In addition, a decrease in investment volumes was also recorded in neighboring Hungary (-67%), Poland (-65%) and the Czech Republic (-16%). Compared to the last five years, it was an average year in terms of investment volume."
"At the same time, the fact that Slovakia has had the highest volume of investments from domestic investors for a long time is also positive. It was no different even in 2023, and domestic investors took care of 58% of all investments," added Ľubor Procházka. Poland had the fewest domestic investments among the V4 countries, namely only 7%.
The latest data from CBRE also showed which regions in Slovakia were the most attractive for investors. Traditionally, the biggest overinvestment was in the Bratislava Region, up to 72%. It was followed by the Trenčín region (16%), in which investments were made exclusively within the industrial sector. The third most dominant was the Žilina Region, which gained 8%, mainly through investments in the office sector.
Experts from CBRE predict that this year investment volumes will again slightly decrease. They estimate their total volume at the level of 400-600 million euros. "We also expect revenues to remain stable, with investments coming in from investors from the V4 countries. However, we also assume that in 2024 we will again witness an increase in the amount of rent, precisely because of indexation," concludes Ľubor Procházka.
In terms of office properties, CBRE expects a slight decrease in vacancy rates in 2024, mainly due to the low volume of projected project completions. Experts also expect the rental level to remain stable and rents to rise slightly again, mainly due to indexation and higher input costs from developers. The rate of physically occupied offices will also grow.
In the area of industrial and logistics real estate, CBRE expects a slight decrease in newly leased space, which was already indicated in 2023. Rents will probably continue to grow, but much more slowly. The production sector should be more dominant, in central and eastern Slovakia we will witness a higher number of new leases.
Retail real estate can also expect an interesting year. In a combination of falling inflation and rising real wages, CBRE predicts greater consumer demand, which will have a positive impact on the turnover of retail operations. The popularity of online sales will continue to grow, but more slowly than expected in 2020 and 2021, when the increase in the share of online sales was really significant.
