Commercial Real Estate - Eastern Europe

The Commercial Real Estate market market in Eastern Europe is anticipated to achieve a value of US$2.69tn by 2024.
It is predicted to exhibit a compound annual growth rate (CAGR 2024-2029) of 1.55%, leading to a market volume of US$2.90tn by 2029.
In terms of global comparison, the United States is expected to generate the highest value in the Real Estate sector, reaching US$25.3tn in 2024.
In Poland, the commercial real estate market is experiencing a surge in demand due to the country's strong economic growth and increasing foreign investment.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Eastern Europe is experiencing significant growth and development.

Customer preferences: Customers in Eastern Europe are increasingly looking for modern and high-quality commercial real estate properties. They prefer properties that offer a range of amenities and services, such as parking facilities, security measures, and easy access to transportation. Additionally, there is a growing demand for flexible office spaces, as more businesses are adopting remote working policies and require flexible lease terms.

Trends in the market: One of the key trends in the Commercial Real Estate market in Eastern Europe is the increasing investment in the office sector. This is driven by the growth of the technology and outsourcing industries in countries like Poland and Romania, which has led to a higher demand for office spaces. Furthermore, the rise of co-working spaces and serviced offices has also contributed to the growth of the office sector. Another trend in the market is the development of retail properties. With the increasing purchasing power of consumers in Eastern Europe, there is a growing demand for modern and well-designed retail spaces. Shopping malls and retail parks are being developed to cater to this demand, offering a wide range of international and local brands.

Local special circumstances: Eastern Europe has seen an increase in foreign direct investment in recent years, particularly from Western European countries. This has contributed to the growth of the Commercial Real Estate market, as foreign investors are attracted to the relatively lower costs of real estate in Eastern Europe compared to Western Europe. Additionally, the region benefits from its strategic location, as it serves as a gateway between Europe and Asia.

Underlying macroeconomic factors: The Commercial Real Estate market in Eastern Europe is also influenced by several macroeconomic factors. Economic growth in the region has been relatively strong, leading to increased business activity and a higher demand for commercial real estate. Additionally, low interest rates and favorable financing conditions have made it easier for businesses to invest in real estate properties. In conclusion, the Commercial Real Estate market in Eastern Europe is experiencing growth and development driven by customer preferences for modern and high-quality properties, increasing investment in the office sector, and the development of retail properties. The region benefits from foreign direct investment and favorable macroeconomic factors, which contribute to the overall growth of the market.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.