Government Incentives in Central and Eastern Europe 1 (CEE) enhance leasing appeal, offering the highest state aid limits in the EU.

Investment incentives across the CEE region continue to attract R&D and BSS projects, with support reaching up to 70% of qualified costs, according to Colliers' latest interactive report: “How Government Incentives Shape Industrial & Office Real Estate in CEE”.

Jan Kamoji-Czapinski, Director, Incentives Advisory, Europe Strategic Advisory at Colliers comments: “Most of the countries focus on supporting industrial and R&D projects. However, office projects can benefit from financial aid through cash subsidies and tax incentives in most of the regional and select capital cities, such as Tallinn, Riga, Vilnius, and Zagreb. Incentives can be substantial, with some reaching up to €30,000 per new employee (e.g., Croatia). Office landlords can leverage these incentives to enhance their leasing appeal, as tenants prioritise locations with financial support”.

“Landlords are often disregarding incentives, but in some locations, they can directly benefit from measures like property tax exemptions. Across most of CEE, tenants factor incentives into location decisions, with differences reaching up to 5x even at the municipal level”, Jan adds.

Tenants, especially large manufacturing companies and shared services centres, consider the availability of public aid as one of the key factors when selecting a location. If two properties are comparable in terms of costs, location, and workforce availability, but one is situated in a region offering a higher level of support, the likelihood of it being leased increases significantly.

Incentives in individual countries include:

- Bulgaria offers high aid intensity but primarily relies on general tax relief.

- Croatia provides extensive tax and cash-based incentives, including aid for job creation and high-tech equipment investments.

- Czech Republic offers CIT exemptions and additional grants for R&D investments.

- Estonia has lower aid intensity but supports R&D projects with grants up to €2 million.

- Hungary aggressively negotiates cash grants and CIT relief up to 80% for a maximum of 13 years.

- Poland allows for maximum EU-permitted aid, with recent increases in grants for industries related to net-zero economy and R&D-related projects.

- Romania provides high aid intensity but focuses mainly on manufacturing investments.

- Serbia aligns with EU aid structures, offering cash grants and tax holidays.

- Slovakia has high aid intensity but limited cash subsidies for shared services.

Investment competitiveness, I&L growth, low office supply, and a variety of incentives make CEE appealing to investors.

Grzegorz Sielewicz, Head of Economic & Market Insights, CEE at Colliers explains: “Despite regulatory shifts such as the global minimum tax, CEE remains highly competitive for investors. Investment volumes in 2024 confirm the region’s recovery, with Poland recording a 138% surge. This follows a weak 2023, marked by stagnation and recession across the region. Estimates from Colliers suggest that economic activity has recovered, with the average growth rate of CEE economies tripling from 0.6% in 2023 to 1.9% in 2024 with Poland leading at 2.9% GDP growth. Projections for 2025
indicate further acceleration, with Poland expected to reach 3.5%”.

The CEE-6 region dominates the broader CEE-13 industrial and logistics market, holding nearly 90% of total modern stock. Strategically positioned at Europe’s core, it benefits from strong transport links, including road, rail, and ports. While developing rapidly, its per capita logistics stock (0.7) remains far below Western Europe's (up to 3), highlighting significant long-term growth potential.

The CEE-6 office market is evolving amid geopolitical shifts and hybrid work trends. Despite lagging behind Western Europe, the region has seen strong growth, with cities like Warsaw, Budapest, and Prague offering lower office stock per capita. Tenants prioritize sustainability, pushing investors toward innovation and resilience.

Hybrid work fuels demand for smart, flexible spaces, while older buildings struggle with ESG compliance. The EU's Green Deal accelerates modernization needs. Despite global challenges, CEE markets benefit from low office supply per capita, low vacancy rates, and a skilled workforce, driving continued growth.

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