The investment activity in the Slovak retail sector remains low

2010-07-06

Uncertainty related to the fluctuating prices has for more than a year discouraged many foreign investors from investing in the Slovak retail sector. During H1 2010, the total investment in both Slovakia and the Czech Republic retail projects represented only 25% of the investment in the two countries during the same period last year, according to Cushman & Wakefield.
One of the main reasons behind the weak investment activity is the lack of liquidity on the capital markets. The number of interested buyers in retail projects in Slovakia has decreased from an average of 10-15 in 2008 to some three-to-five in H1 2010 according to estimates from CB Richard Ellis. The same source forecasts that the market will be dominated in the next two years by investors who will fund such projects from their own assets. During this period, bank money will be scarce.
Another reason for the lack of interest in investments in retail is the high levels of rents in Slovakia, which pushes many retail investors to go further east to countries like Turkey, Russia and Ukraine.