New Delhi -°C
Today in New Delhi, India

Aug 20, 2019-Tuesday
-°C

Humidity
-

Wind
-

Select city

Metro cities - Delhi, Mumbai, Chennai, Kolkata

Other cities - Noida, Gurgaon, Bengaluru, Hyderabad, Bhopal , Chandigarh , Dehradun, Indore, Jaipur, Lucknow, Patna, Ranchi

Tuesday, Aug 20, 2019

World’s biggest landlord targets eastern Europe office boom

The company plans to spend as much as 500 million euros ($562 million) over the next two years on property in the region.

business Updated: May 22, 2019 13:01 IST
Matthias Wab
Matthias Wab
Bloomberg
Munich-based Allianz hired Villadsen last year to set up shop in Vienna and become more active in the fast-growing region.
Munich-based Allianz hired Villadsen last year to set up shop in Vienna and become more active in the fast-growing region.(HT File photo / Representative image )
         

The office boom in central and eastern Europe, driven by lower wages and a growing pool of local talent, has got the attention of the world’s biggest real estate investor.

“Banks and financial services firms are looking for cost-efficient office space and for skilled people, which they can still find in the region,” said Thomas Villadsen, the head of Austria and CEE at Allianz Real Estate. The company plans to spend as much as 500 million euros ($562 million) over the next two years on property in the region.

Munich-based Allianz hired Villadsen last year to set up shop in Vienna and become more active in the fast-growing region. With 72 billion euros of real estate assets globally, Allianz is the world’s biggest landlord but has been late to target a region where Austrian rivals like CA Immobilien Anlagen AG or Immofinanz AG led the pack.

Allianz will look at investments in the capital cities of Warsaw, Prague, Bratislava, Budapest or Vienna, while staying away from south-eastern Europe, where it considers political and economic risks too high, Villadsen said. It agreed to buy the Icon tower at Vienna’s main railway station from Signa Holding GmbH last year for about 500 million euros.

Banks are among the drivers of the expansion, which has advanced from the days in which it was low-skilled jobs like call centers that moved east. Morgan Stanley employs more than 1,000 people in its Budapest office, providing firm-wide services from risk modeling to internal audit. Goldman Sachs Group Inc. last year said it plans to hire another 150 people in Poland in addition to its existing 600.

Allianz plans to grow real estate investments in Austria and CEE to as much as 5 billion euros within 10 years, from 3 billion euros now, Villadsen said. Apart from office space, he’s also looking at residential properties and logistics.

Prices in some cities have risen so much that Allianz is already dropping out of some bidding rounds, for instance in Warsaw, according to Villadsen. In Poland, top yields are around 4.5% to 4.7% and falling, he said. In Vienna, yields are between 3.5% and 4% while Prague sees some deals below 4%. Yields in Budapest are about 1 percentage point higher than in Prague.

(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)

First Published: May 22, 2019 12:53 IST

more from business