While many Western European economies are contracting and facing a debt crisis, the CEE region has met strong growth expectations, assisted by EU integration and favourable demographics, and therefore has attracted an increasing level of interest from GPs looking for potential investment capital.
Preqin Investor Network currently tracks 31 real estate funds on the road targeting investment opportunities in Central and Eastern Europe. These vehicles are looking to raise $9.8bn in total, with an average fund size of $318mn. Of all CEE-focused funds on the road, 13 private equity funds are managed by GPs headquartered in the CEE region, while 14 are raised by GPs based in other parts of Europe. In terms of fundraising status, 12 CEE-focused real estate funds in market are yet to hold a first close while 15 have already reached an initial close.
An example of a real estate fund on a read targeting investment opportunities in Central and Eastern Europe is GE Polish Retail Fund. The €360mn vehicle is looking to maximize income and capital growth through active asset management, refurbishment, expansion and potential future acquisitions in Poland. Another vehicle, VTBC-Ashmore Real Estate Partners I, which is seeking €500mn, is targeting investments in commercial and residential real estate development projects in Moscow, St Petersburg and other substantial Russian metropolitan areas.