WOOD Flash – CEE real estate: yields cheat sheet

Since the start of the tightening cycle, we have seen yields increase across CEE by around 100bps, on average (with deviations around this level depending on the city and sector). This lags both the magnitude of the move of the funding rates, as well as the yield expansion reported by the leading realtors for much of Western Europe (where we have seen the yields move out by around 150bps for both offices and logistics since the tightening cycle started). Thanks to the combination of – often – less significant moves, and a higher starting yield, the impact on values in CEE has been fairly benign so far. Across Europe, real estate transaction activity is likely to pick up in 2024E, from the low base of last year, in our view. Barring a more forceful easing ahead by the ECB than the market expects currently, we would expect real estate yields to continue to be driven higher.