Country Risk and International Real Estate Investment: What do Investors in CEE say?

Amid increased uncertainty investors tend to adopt cautious attitudes and revise their strategies, which results in disinvestment in emerging markets and concentration on more mature regions. Similarly, the downturn of 2008 led to the increased perception of country risk and shrinking investment volumes. This resulted in the situation when, after the years of promising growth and soaring returns, some CEE markets had to face the severe reality of being excluded from investors’ portfolios and strategic plans. At the same time, in the view of the vague concept of country risk it is unclear what exactly forced investors to radically change their plans. Due to the limited research on CEE caused in the first instance by the immaturity of some markets in the region and the resulting lack of transparency and market data, it is unclear what factors influence investment decisions in this region. By means of qualitative method, the presented study reflects on investors’ risk perception and attitudes towards investing in CEE and seeks to answer the question of “What are the determinants of real estate investment decision-making in CEE?” Input for the analysis comes from conducting expert interviews with the market players active in CEE and primarily based in Austria.