The Next 12 Months Will Continue to Be Challenging for Real Estate Investment

Robert Martin, Non-Executive Member of the Advisory Board of AG Capital, talked to Kapital Media in Sofia recently, on the real estate investment perspective over the next 12 months for Bulgaria and the countries from Central and Eastern Europe (CEE). 

We are publishing below a summary in English, on highlights from several key topics and trends he addressed during his interview:

Robert Martin on Joining AG Capital’s Advisory Board

AG Capital’s Advisory Board (AB) was established in 2023, within our corporate strategy and vision for achieving a growing and successful presence in CEE. Robert Martin joined the AB earlier this year together with Lahlou Khelifi.

“I have known the AG Capital team for several years and have been impressed by the way they were operating in their markets and their ambition of becoming a larger regional player.  My role is to use my 25 plus years of European real estate private equity experience to question and guide the management to reach their goals and to influence their thinking when it comes to running an investment management business”, says Robert Martin in his interview. 

Factors Shaping the Real Estate Agenda in Europe and the Investment Perspective for 2025

Commenting on his expectations for the upcoming year in terms of real estate investments, Robert Martin outlines two major issues that will definitely be playing an important role in shaping the new agenda and in reducing global political uncertainty – the presidential elections in the United States, and the clearer indications on interest rates that the Federal Reserve and the European Central Bank (ECB) are expected to take. He also points out several other factors influencing the big picture in Europe, with a key impact on European real estate investments – the war in Ukraine, the energy price volatility, compliance with the EU Taxonomy, and continuing uncertainty of occupier demand.

“My personal belief is that the real estate investment market across Europe is bumping along the bottom and if you can make your appraisals work (not easy), then the next 18 -24 months should be an exceptional time to buy good quality assets. Therefore, I believe 2025 will be the beginning of a new wave of investment transactions”, notes Robert Martin.

Looking into Opportunities on CEE Real Estate Segments and the Growing Demand for Data Centres

In his interview with Kapital, Robert Martin sees the logistics sector in CEE to be promising and optimistic, as it is being driven by structural shifts in supply chains, the growth of e-commerce, and the increasing demand for modern infrastructure.  He outlines Poland’s, the Czech Republic’s, Hungary’s, and Romania’s positioning as key markets, where logistics assets are currently thriving, supported by favourable economic fundamentals, strategic locations, and government investments in infrastructure. 

“The need to supply and rebuild Ukraine in the coming years, will also lead to increased demand for logistics and warehousing facilities, particularly in Romania and Poland.  AG Capital will continue its expansion into this sector”, he says.

He also addresses the residential properties’ segment, where he expects the huge appetite from institutional investors for leased residential properties in Western Europe to reach the CEE markets as well. Referring to AG Capital, he believes that this market is one for which the company, backed by its 25 years of experience in developing first class residential products, is well-placed, and ready to enter. 

Commenting on the growing importance of the data centre market, both in Europe and in CEE, he adds: “The data centre market will continue to have a demand -supply imbalance across Europe including CEE. Demand for data centres will continue to grow exponentially and the difficulties of finding sustainably powered and well-located sites will make those sites which are available extremely attractive.  I believe this is also an area that AG Capital, with its local knowledge and experience, can excel in CEE.”

“The next 12 months will continue to be challenging for real estate investment.  However, the different sectors will perform differently, with logistics and residential seeing a steady improvement in investment numbers, but offices and retail will continue with their structural challenges”, says Robert Martin.  

Perspective for Commercial Real Estate Investment in the CEE Region for 2025

He admits that none of the European markets have made it through the crisis yet, but the core markets of Western Europe are likely to emerge first.  He explains that the CEE Region will always lag Western Europe, and that its resurgence is being limited by the relative size of the markets and the lack of liquidity.  CEE’s strong relationship with the German economy is also a factor delaying major recovery, given the fact that the latter is currently suffering. However, he believes that in 2025 Central Europe could start seeing some real interest from international investors again.

“In addition to the difficult economic environment, high interest rates, EU Taxonomy compliance, construction cost uncertainty and geopolitical unrest, I believe the biggest challenge in CEE has always been the perception of risk from international investors and how this affects liquidity and ultimately, your ability to exit an asset when you want to. In several of the markets such as Hungary and the Czech Republic there is a strong local investor base, but they have their own challenges, and the lack of domestic capital in Poland is always a concern”, he concludes.

For more and detailed comments, please visit the whole interview, now available in Bulgarian at Kapital Media.

Robert Martin

Non-Executive Member of the Advisory Board

Robert was a co-founding Partner and a member of the Investment Committee at Europa Capital until September 2023. At Europa, Robert was the Head of Investments and therefore managing acquisitions and origination across Europe but with particular oversight of Central Europe where he invested for Europa Capital for over 25 years. Robert is a Member of the Royal Institution of Chartered Surveyors and received a BSc in Land Management from Reading University, and an MBA from the University of Cape Town, South Africa.

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