According to weekly Euro, Immoeast approved first phase of residential projects for more than EUR 180m in CEE region including Czech Republic. In first phase, company counts with 2,000 units in Poland, Slovakia, Bulgaria, and Romania. As Immoeast considers Czech Republic as main market, residential construction will be launched also in Prague. According to CEO in medium term residential projects in CEE region have the highest potential due mainly to strengthening middle class. Immoeast won’t act as long-term investor, on the other hand it will cooperate with local developers and sell units shortly after completion.
Our view: Apart from 800 residential units in Baltic countries, Immoeast didn’t invest into residential projects. Immoeast further diversify its portfolio. We see the residential segment as perspective, however competition in this segment mainly in Prague is tough and delivering significantly above average yields (which currently stands at 5.5 – 6.0% in Prague) would be difficult.