EBRD revises growth forecast downward amid trade and investment challenges

The European Bank for Reconstruction and Development (EBRD) has lowered its economic growth forecast for its investment regions in 2025, revising it down by 0.3 percentage points compared to its previous outlook in September 2024. Growth is now expected to reach 3.2% this year before rising to 3.4% in 2026, according to the latest Regional Economic Prospects report.

The downward revision is attributed primarily to weaker external demand affecting central Europe, the Baltic states, and southeastern EU economies. Additionally, ongoing conflicts and a slow pace of reform continue to impact growth in the southern and eastern Mediterranean (SEMED) region.

Ukraine and Broader Economic Pressures

Ukraine’s economic outlook has been revised downward due to persistent damage to its electricity infrastructure caused by Russian attacks, which have hampered industrial production. The country’s GDP is projected to grow by 3.5% in 2025, with a potential increase to 5.0% in 2026, assuming a ceasefire is in place by the end of the year.

The report highlights a broader economic slowdown across EBRD regions, citing subdued global growth and increasing trade and investment fragmentation. It notes a widening performance gap between advanced European economies and the United States, partly due to uncertainty over potential US tariff increases and retaliatory trade measures.

If the United States were to impose an additional 10 percentage points in tariffs on all imports, GDP in EBRD regions could decline by 0.1% to 0.2% in the short term. The economies most vulnerable to such measures include Jordan, Slovakia, Hungary, and Lithuania due to their trade exposure to the US. Meanwhile, Bulgaria, Slovenia, and Romania are particularly affected by the recently announced US tariffs on steel and aluminium.

While trade restrictions present risks, the report also notes that some economies with privileged access to the US market—such as Uzbekistan, Vietnam, Mexico, the UAE, and Saudi Arabia—could benefit from trade diversion and increased foreign direct investment (FDI).

Geopolitical Tensions and Inflation Trends

The EBRD points to rising geopolitical tensions as a key factor driving a sharp decline in trade and FDI flows between geopolitical blocs, with the US-led West and the China-Russia axis increasingly operating in separate economic spheres. At the same time, FDI from the US and China has surged in so-called “connector” economies that serve as intermediaries in global trade.

Inflation in the EBRD regions has eased, falling from a peak of 17.5% in October 2022 to 5.9% in December 2024. However, it remains more than one percentage point above pre-pandemic levels, with inflationary pressures increasingly driven by domestic demand factors such as expansionary fiscal policies and rapid wage growth.

“While inflation has dropped notably, the sources of inflationary pressures have shifted,” said Beata Javorcik, the EBRD’s Chief Economist. “Fiscal policy and wage dynamics now play a much greater role, and the path ahead requires careful policy calibration to ensure a stable growth trajectory.”

The report also highlights fiscal challenges across EBRD regions, with government deficits widening due to rising industrial policy costs, ageing populations, and increased defence spending. Defence expenditures in EBRD economies have nearly doubled over the past decade, rising from 1.8% of GDP in 2014 to 3.5% in 2023, with further increases expected.

Regional Growth Projections
• Central Europe and the Baltic States: Growth is forecast at 2.7% in 2025 and 2.8% in 2026. The downward revision for 2025 reflects weaker demand from advanced European economies, which has affected exports and investment.
• Southeastern EU: Growth slowed to 1.5% in 2024 but is expected to recover to 2.1% in 2025 and 2.4% in 2026.
• Western Balkans: Growth is projected to remain stable at 3.6% for both 2025 and 2026.
• Central Asia: Growth declined to 5.4% in 2024, down from 5.7% in 2023, but is expected to recover to 5.7% in 2025 before moderating to 5.2% in 2026.
• Eastern Europe and the Caucasus: Growth slowed to 3.9% in 2024, with a further decline to 3.6% expected in 2025 before rising to 4.3% in 2026.
• Türkiye: Growth moderated to 2.9% in 2024, down from 5.1% the previous year. A recovery to 3.0% is expected in 2025, followed by 3.5% in 2026 as inflation declines and real wages improve.
• Southern and Eastern Mediterranean: Growth stood at 2.5% in 2024, constrained by conflicts and slow reform progress. A recovery to 3.7% is expected in 2025, followed by 4.1% in 2026.

The report underscores the need for policy adjustments to address structural weaknesses in EBRD economies, particularly in response to evolving geopolitical and trade dynamics. While inflation has eased and investment flows are adjusting to new global patterns, continued vigilance is required to maintain economic stability amid ongoing challenges.

Source: EBRD

CTP reports EUR 1.1 billion profit for 2024, driven by rental growth and development expansion

CTP N.V. (CTP) has reported a record profit of €1.1 billion for 2024, reflecting strong rental growth, high occupancy rates, and an expanding development pipeline. The company’s net rental income increased by 19% year-on-year to €646.8 million, while company-specific adjusted EPRA earnings rose 12.5% to €364 million.

Gross rental income grew by 16.1% to €664.1 million, supported by a 4% like-for-like rental increase driven by indexation and lease renegotiations. As of 31 December 2024, the company’s annualised rental income stood at €742.6 million, with a 93% occupancy rate across its portfolio.

Development and Portfolio Growth

CTP completed 1.3 million square meters of new developments in 2024, with a yield on cost of 10.1% and 92% of the space leased upon completion. This brought the company’s total gross lettable area (GLA) to 13.3 million square meters. The group’s total asset value increased by 17.2% to €16 billion, while its EPRA NTA per share grew by 13.6% to €18.08.

At the end of 2024, CTP had 1.8 million square meters under construction, with an expected rental income of €142 million once fully leased and a yield on cost of 10.3%. The company also expanded its landbank to 26.4 million square meters, securing long-term growth opportunities.

Market Demand and Leasing Activity

CTP signed leases for 2.1 million square meters in 2024, a 7% increase from the previous year. The company reported a rent collection rate of 99.8%, highlighting the stability of its tenant base. Rental income was further supported by the nearshoring trend, with Asian manufacturers producing in Europe for the European market accounting for 20% of CTP’s leasing activity in 2024.

CEO Remon Vos noted the continued demand for industrial and logistics real estate in Central and Eastern Europe (CEE), driven by supply chain modernization, e-commerce growth, and nearshoring. “We have a strong leasing pipeline for 2025, which will allow us to maintain our development pace of over 10% of new GLA per year,” he said.

Financial Performance and Outlook

CTP maintained a solid balance sheet with a loan-to-value (LTV) ratio of 45.3%, down from 46% in 2023. The company successfully raised €300 million in equity through an oversubscribed accelerated bookbuild, allowing it to fund further developments and acquisitions, including an 830,000-square-meter brownfield redevelopment in Düsseldorf.

The company has set a 2025 guidance for company-specific adjusted EPRA EPS between €0.86 and €0.88. It expects to continue delivering double-digit NTA growth, supported by development completions and rental income expansion.

CTP has proposed a final 2024 dividend of €0.30 per share, bringing the total annual dividend to €0.59 per share, a 12.4% increase from the previous year. The default dividend option is scrip, though shareholders can opt for cash payment.

Future Developments and Investment Strategy

Looking ahead, CTP plans to deliver between 1.2 million and 1.7 million square meters of new developments in 2025, with 35% of this space already pre-leased. The company aims to reach €1 billion in rental income by 2027 and 20 million square meters of GLA by the end of the decade.

CTP continues to focus on tenant-led development, with 80% of its projects under construction located in existing parks. The company is also expanding its renewable energy initiatives, with 138 MWp of installed photovoltaic capacity and a target yield on cost of 15% for energy investments.

With a strong financial position, high occupancy rates, and a growing development pipeline, CTP expects to maintain its market leadership in the industrial and logistics real estate sector across Central and Eastern Europe.

New EU legislation exempts 95% of Romanian companies from ESG reporting

A recent European Commission reform significantly reduces the number of Romanian companies required to report on environmental, social, and governance (ESG) performance. Under the Omnibus proposal, the number of companies subject to ESG reporting in Romania will drop from over 6,000 to just 300, marking a 95% reduction.

The revision of the Corporate Sustainability Reporting Directive (CSRD) now limits mandatory reporting to companies with more than 1,000 employees. This change exempts most small and medium-sized enterprises (SMEs), including those listed on the stock exchange, from ESG disclosure obligations. Across the European Union, the total number of companies affected by CSRD regulations is expected to decrease by 80%.

Impact on Romanian Businesses

For Romania, the policy adjustment will remove ESG reporting requirements for approximately 5,700 companies, leaving only large corporations, primarily multinationals, within the directive’s scope. The move is aimed at reducing administrative burdens for SMEs and allowing them to focus resources on direct sustainability measures rather than compliance paperwork.

“This reform is not a retreat from sustainability goals but a recognition of the need to balance regulatory requirements with economic realities,” said Răzvan Nica, founder of BuildGreen and CEO of Carbon Tool, a company specializing in sustainability consulting. “By streamlining reporting obligations, businesses can redirect funds toward carbon footprint reduction, energy efficiency improvements, and technological advancements that produce tangible economic and environmental benefits.”

Data from Eurostat places Romania 22nd among EU countries in terms of ESG reporting, with only 12% of SMEs currently using structured systems to monitor sustainability metrics. In contrast, in countries such as Sweden and Denmark, over 60% of SMEs voluntarily report ESG performance. The impact of the new policy will therefore vary across different European markets.

Strategic Adjustments for Businesses

Despite the exemption from mandatory ESG reporting, sustainability remains a critical factor for businesses, particularly for securing green financing. BuildGreen advises Romanian companies to maintain a proactive approach by adopting ESG practices voluntarily.

The company recommends:
• Implementing ESG systems: Even without reporting obligations, sustainability standards are key for businesses seeking financing aligned with environmental goals.
• Aligning with international frameworks: Voluntary compliance with CSRD, the Global Reporting Initiative (GRI), or the Task Force on Climate-Related Financial Disclosures (TCFD) can facilitate access to international markets.

BuildGreen and Carbon Tool plan to continue supporting Romanian businesses in integrating sustainability into their long-term strategies, offering consulting services and practical solutions for managing environmental impact efficiently.

EIB Global invests USD 75 million in Helios Fund V to support African businesses

The European Investment Bank (EIB Global) has committed $75 million to Helios Investors V, L.P. (Helios Fund V) to support the growth of digital infrastructure, financial services, and technology-focused businesses across Africa. The investment was announced by EIB Vice-President Ambroise Fayolle at the Finance in Common Summit in Cape Town, South Africa.

Helios Investment Partners, the fund’s manager, is the largest private investment firm focused on Africa. The fund will target businesses that align with the EU-Africa Global Gateway Investment Package, supporting sectors such as digital infrastructure, financial services, and tech-enabled services, including healthcare, education, and training. It aims to enhance digital connectivity by investing in data centers, fibre-optic networks, and telecom infrastructure, as well as financial and technology services that facilitate digital payments and financial management.

As part of its commitment to social impact, Helios has pledged to invest at least 30% of its portfolio in companies that meet the EIB’s gender equality criteria. The firm joined the 2X Global network in early 2024, reinforcing its focus on gender-inclusive initiatives such as mentorship programs, leadership training, and increased opportunities for women in senior roles.

The EIB’s investment in Helios Fund V is part of its broader effort to increase private capital flows into Africa, in coordination with other European development finance institutions. Last year, EIB Global invested €232 million in funds operating across the continent, representing nearly half of its total fund investments.

South Africa’s Deputy Minister of Finance, David Masondo, welcomed the investment, emphasizing its role in strengthening business collaboration and mobilizing capital for high-impact sectors. He noted that such initiatives support industrial growth, job creation, and economic resilience.

EIB Vice-President Ambroise Fayolle highlighted Helios’ extensive experience in Africa, describing the firm as a key partner with strong investment networks and a significant local presence. He stated that the investment aligns with the Global Gateway priorities and aims to support value-driven and socially responsible enterprises in Africa.

The investment reflects a broader effort to drive private sector-led economic development in Africa, with private equity firms playing a crucial role in bringing external capital, expertise, and technical support to local businesses.

Increase in cash loans as installment and mortgage lending declines in January

The Polish credit market saw a significant rise in cash loan activity at the start of the year, while mortgage and installment loans experienced sharp declines, according to data from the Credit Information Bureau (BIK).

In January 2025, banks and credit unions issued 27.2% more cash loans compared to the same period last year. The total value of these loans surged by 43.3% year-on-year, reaching PLN 9.257 billion, marking the highest recorded monthly value for cash loans. This increase was largely driven by high-value loans exceeding PLN 50,000, reflecting both consolidation of existing debts and increased consumer spending. The average cash loan granted in January stood at PLN 25,788, up 12.6% from the previous year.

Despite the rise in cash loans, installment loans saw a 24.2% drop in the number of loans issued, with the total value decreasing by 12.2% year-on-year. The decline was attributed to fewer small-value installment loans, particularly in deferred payment transactions. However, the average value of an installment loan increased by 15.8%, reaching PLN 1,979, due to a higher share of financing for more expensive goods and services.

The mortgage market also saw a sharp decline. The number of housing loans issued in January was 34.3% lower than in the same month last year, while the total value of new mortgage lending fell by 32.6% year-on-year and 10.2% month-on-month. However, experts note that the decline is largely due to the impact of the Safe Loan 2% program, which boosted lending figures in early 2024. Adjusting for that effect, mortgage lending would have shown a 78.2% increase year-on-year. The average value of a new mortgage loan in January was PLN 44,500, 2.6% higher than a year ago.

Loan repayment quality continued to improve, with all four key Bank Credit Quality Indices showing better results both month-over-month and year-over-year. Analysts attribute this to rising wages and stable interest rates. The mortgage loan quality index stood at 0.7%, while installment loans recorded 1.36%, indicating a low-risk lending environment.

While the credit market remains stable, analysts continue to monitor potential risks, particularly in mortgage lending, where future trends may depend on government support programs and interest rate adjustments.

Source: BIK

Logistics sector adapts to ESG regulations and green investments

The logistics industry is accelerating its transition toward sustainability, driven by new ESG reporting requirements and the need for eco-friendly innovations. With the European Commission estimating that 50,000 companies will be subject to ESG regulations, only 42% feel prepared for compliance. These regulations apply to firms with more than 250 employees, revenue exceeding €40 million, or assets over €20 million.

Companies are implementing environmental management systems to track greenhouse gas emissions, energy use, and sustainability indicators. Digital solutions such as ESG reporting software are being adopted to streamline data collection and analysis. Firms like Geis Group and cargo-partner are leveraging these tools, while also working on carbon reduction strategies such as green energy sourcing, route optimization, and fleet electrification.

Eco-innovation in transport is gaining momentum as firms explore alternative fuels, biofuels, and electric vehicles. Companies are also securing HVO100 biofuel, which can reduce CO₂ emissions by up to 90%, though its 25-50% higher cost compared to diesel remains a challenge. Meanwhile, state incentives for biofuels remain limited, impacting the speed of adoption.

Multimodal transport solutions, combining rail and road freight, are emerging as another sustainable alternative. SAF fuel and biomethane-blended fuels are now being used in air and maritime shipping, helping reduce emissions by 25% to 84%. Despite infrastructure and cost challenges, logistics companies are prioritizing sustainable investments to align with ESG goals and enhance competitiveness in an evolving market.

Brose expands production in Ostrava with lease at Airport Multimodal Park

Brose, the international automotive supplier, has signed a lease agreement with Concens Investments for the entire Hall D at Ostrava Airport Multimodal Park (OAMP). The facility, located near Leoš Janáček Airport in Mošnov, is part of the park’s ongoing Phase II development. The leased space covers 12,000 square meters of industrial area and 1,500 square meters of office space. Production at the new facility is expected to begin in September 2025, focusing on the development, testing, and manufacturing of car seat structures for various automotive manufacturers.

Brose has been active in the Czech Republic for more than two decades, operating plants in Kopřivnice and Rožnov, along with an office in Ostrava. The company currently employs approximately 2,990 people in the country. Niclas Pfüller, General Manager of Brose Czech Republic, highlighted the strategic advantages of the Ostrava region and the company’s continued expansion. He noted that the Mošnov site will include production facilities as well as a testing and development department, along with social facilities for employees.

Ostrava Airport Multimodal Park offers direct connections to air, rail, and road transport, including access to the D1, D48, and D56 motorways. Tomáš Novotný, CEO of Concens Investments, emphasized that this multimodal connectivity is a key factor for tenants such as Brose, which supplies automotive manufacturers in both the Czech Republic and Slovakia. He described the project as an example of how the park serves not only as a logistics hub but also as a base for manufacturing companies that require skilled labor.

Phase II of the OAMP project is currently under construction and includes four halls designed for logistics and light manufacturing. The development is aiming for BREEAM environmental certification at the Very Good level, with a focus on energy efficiency. Planned sustainability measures include rooftop photovoltaic panels, LED lighting, and the potential replacement of conventional gas heating with heat pumps.

Concens Investments began the development of OAMP in 2018, with the first phase comprising four industrial halls totaling 138,000 square meters. A portion of the complex, including a logistics park in Nošovice, was sold to the US real estate investment fund EQT Exeter in 2021. The second phase, now under construction, will add 120,000 square meters of A-class commercial space across four additional halls. Completion is expected in the first half of 2024, with leasing opportunities available.

In parallel, the third phase of development is underway on a 513,000-square-meter site acquired from the Statutory City of Ostrava. This phase will include three new halls, serving as a distribution center for BMW Group under a 10-year pre-lease agreement. The development includes access roads and a private railway terminal. A fourth phase is also being prepared on a 155,000-square-meter site, where a 97,500-square-meter industrial hall has received a building permit.

Upon full completion, the Ostrava Airport Multimodal Park is projected to exceed 550,000 square meters of gross leasable area, reinforcing its role as a key industrial and logistics hub in the region.

Nearly 80% of Romanian employees use AI tools at work

A growing number of employees in Romania are integrating artificial intelligence into their daily work, with nearly 80% using AI-powered tools, according to a survey conducted by Genesis Property, a leading office building owner. The study, which surveyed 1,175 respondents nationwide, found that 77% of employees use AI either daily or occasionally, while 88% believe that more automation tools should be introduced in office environments. Additionally, 70% expressed a desire to develop new skills in AI and automation systems.

For many employees, AI is seen as a tool that enhances productivity rather than a replacement for human work. About 41% of respondents believe AI should function as a virtual mentor, providing answers and guidance, while 37% view it as an advanced system capable of handling complex tasks with minimal human intervention. Looking ahead, nearly half of those surveyed expect AI to be increasingly used in 2025 to improve efficiency, though they do not foresee it fully replacing human roles.

Ionel Purice, CEO of Genesis Property, highlighted the shifting role of AI in modern workplaces. “Artificial intelligence is becoming a crucial part of professional life, especially in streamlining repetitive tasks. This allows employees to focus on more creative and collaborative activities that add greater value. Offices are evolving beyond spaces for routine work into hubs of innovation, where technology complements human capabilities rather than competing with them. The future of work is not about doing more, but about working smarter and more efficiently,” Purice said.

Beyond productivity, AI is also seen as a tool for fostering workplace communities. The survey found that 68% of employees believe AI can help create stronger connections within workspaces. When asked about measures that companies should take to support this transformation, 52% emphasized the need for greater flexibility, 45% called for better workplace amenities, and 38% suggested that access to cultural and social events would enhance workplace engagement.

Genesis Property is currently finalizing the development of YUNITY Park, a campus designed to integrate work, technology, and community experiences. The project, initiated by entrepreneur Liviu Tudor, includes an open-air amphitheater with 1,500 seats, pedestrian pathways, water features, an urban forest, and creative meeting spaces. The first two phases of the development, completed in 2023, involved an investment of over €30 million. The third phase, the Innovation Center, is scheduled to open later this year following an additional €20 million investment.

The survey, conducted via the iVox platform between January and February 2025, aimed to assess employee expectations for the future workplace. It included a sample of 1,175 internet users in Romania, with nearly 57% reporting a net income above 5,000 lei per month.

Heitman expands European self-storage portfolio with Swedish acquisition

Heitman LLC, a global real estate investment management firm, has strengthened its presence in the European self-storage market by acquiring a majority stake in Servistore, Sweden’s third-largest self-storage operator. The deal, completed in February 2025, is part of Heitman’s broader strategy to expand its portfolio in the sector.

Servistore currently operates 31 self-storage facilities across 14 cities in Sweden, with 25 locations already open and six more set to launch soon. The company’s network includes more than 4,000 storage units, covering approximately 330,000 square feet.

This latest acquisition aligns with Heitman’s continued investment in self-storage, a sector that has seen growing demand across Europe. The firm has previously expanded in Ireland (2022), Germany (2021), and the United Kingdom (2020). Heitman has been active in self-storage investments since 1996 and currently manages more than 600 self-storage assets globally, with a combined value of approximately $7.8 billion.

A key aspect of Servistore’s operations is its technology-driven model, with facilities running on an unmanned basis. Heitman plans to scale this approach in Sweden by integrating advanced revenue management software and expanding ancillary services such as storage insurance offerings.

Tony Smedley, Managing Director and Head of European Private Equity at Heitman, highlighted the firm’s extensive experience in self-storage, which has allowed it to secure off-market acquisitions in Europe. Caleb Mercer, Managing Director of European real estate investments at Heitman, pointed to Sweden’s strong market fundamentals—driven by population growth, urbanization, and increased household mobility—as key factors in the decision to invest.

This acquisition reinforces Heitman’s commitment to expanding its footprint in the European self-storage sector, positioning Servistore for further growth under its new ownership.

Photo: Tony Smedley, Managing Director and Head of European Private Equity at Heitman

German companies continue to cut jobs as employment barometer declines

fletcher@cijeurope.com
27 February 2025
Jobs

German businesses are continuing to reduce their workforce, with the ifo Institute’s employment barometer dropping slightly to 93 points in February from 93.4 points in January. Despite a modest upward trend in the German Institute for Economic Research’s (DIW Berlin) economic barometer, which rose to 90.4 points, the labour market remains under pressure.

Job Cuts in Key Sectors

The industrial sector faces particularly severe job reductions, even as its employment barometer showed a slight increase in February. Service providers are also scaling back their workforce planning, with IT service companies making significant reductions. Meanwhile, the retail sector continues to struggle, according to the ifo Institute.

The Institute for Employment Research (IAB) also highlighted concerns over the weakening labour market. Its labour market barometer declined for the sixth consecutive month in February, dropping by 0.4 points to 98.3 points.

Unemployment Expected to Rise

Despite a slight increase in the European Labour Market Barometer to 99.5 points in February—the first rise in five months—experts remain cautious. Enzo Weber, an analyst at IAB, warned that unemployment is likely to increase while overall employment levels stagnate.

“The outlook is clearly negative,” Weber stated, pointing to the fact that the employment component of the IAB index has fallen below the neutral 100-point mark for the first time outside of the COVID-19 pandemic. In February, it dropped by 0.4 points to 99.9.

While DIW Berlin suggests that domestic demand may provide a modest boost to the economy, declining exports during the winter months are seen as a worrying sign. However, the institute notes that some degree of stabilisation may be emerging in the labour market.

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