CEE emerges as Europe's new defence industry powerhouse, says KPMG

Business Forum
CEE is transforming from Europe's periphery into a defence industry powerhouse, according to a new KPMG study. The region's combination of cost efficiency, industrial capacity, and strategic location is attracting investment as European defence spending increases.

The study highlights how Poland, Romania, the Czech Republic, Slovakia, and Hungary are leveraging their shared EU and NATO membership to develop joint production and innovation capabilities.

"Central and Eastern Europe is no longer the periphery of European defence, but the space where security, industry, and competitiveness converge," explains Tudor Grecu, CEE Head of Defence, Partner, Head of Advisory, KPMG in Romania.

The war in Ukraine has accelerated this transformation, with the region becoming NATO's strategic corridor. The Black Sea is emerging as a central strategic node, with Romania's Constanța positioned as a key maritime security hub. At the same time, investment in dual-use infrastructure, including Danube ports and rail connections, creates opportunities for supporting Ukraine's reconstruction and European industry.

KPMG experts point out that each country brings complementary strengths: Poland offers market scale and cybersecurity expertise, Romania provides strategic geography and Black Sea access, the Czech Republic contributes deep defence industrial tradition, Slovakia focuses on ammunition production, and Hungary emphasises partnership-driven localised production.

"For investors and policymakers alike, CEE is no longer an alternative location, but one of the few regions capable of delivering volume, speed, and industrial scale simultaneously in the defence sector," explains Air Flotilla General (r) Adrian Duță, Senior Advisor, Defence & Security, KPMG in Romania.

RECOMMENDED
UNIQA Real Estate launches office fund targeting CEE
Real estate

UNIQA Real Estate launches office fund targeting CEE

UNIQA Real Estate Management GmbH is launching the UQA Real Estate Fund, a closed-ended real estate fund for institutional investors. The fund will invest in Core and Core Plus office properties across Europe, with a geographic focus on Austria, Poland and the Czech Republic. The move represents a further step in UNIQA Real Estate's opening of its investment and management platform, previously dedicated to the UNIQA Group, to third-party investors.

Tesco explores sale of Central European units as Kaufland circles
Real estate

Tesco explores sale of Central European units as Kaufland circles

Speculation has intensified over a possible sale of Tesco's operations in Hungary, the Czech Republic and Slovakia, with the Financial Times reporting that the Schwarz Group, which operates the Lidl and Kaufland chains, is expected to make an offer for the Czech and Slovak businesses. Dutch retailer Ahold Delhaize and Polish discounter Biedronka are also named among potential bidders. 

Bucharest to add 1,500 new hotel rooms by 2028
Real estate

Bucharest to add 1,500 new hotel rooms by 2028

Bucharest's hotel market recorded revenue per available room (RevPAR) growth of 5% in the first half of 2026 compared with the same period in 2025, and 25.2% above pre-pandemic levels, according to Cushman & Wakefield Echinox. The performance is underpinning a development pipeline of more than 1,500 new rooms expected to enter the market by 2028, equivalent to approximately 13% of existing hotel stock, spanning segments from midscale to luxury.

CEE property investment climbs 24% above 5-year average in 2025
Real estate

CEE property investment climbs 24% above 5-year average in 2025

Commercial property investment in CEE rebounded strongly in 2025, with a combined volume of €11.3 billion across Czech Republic, Poland, Hungary, Romania and Slovakia. This represents a 34% year-on-year increase and stands 24% above the five-year average, according to data by Knight Frank.

CEE property investment surges 31% in 2025
Real estate

CEE property investment surges 31% in 2025

CEE property investment reached a turning point in 2025, with transaction volumes across the region's six main markets totalling €11.6 billion, representing 31% annual growth according to Colliers' latest analysis.

RECOMMENDED FROM THE HOME PAGE
Bucharest yields remain well above Western European levels
Real estate

Bucharest yields remain well above Western European levels

Bucharest is consolidating its position within the Central and Eastern European (CEE) real estate market, combining rental growth across major asset classes with investment yields that remain well above Western European levels, according to the DNA of Real Estate Europe Q2 2026 report published by Cushman & Wakefield. Across Europe in Q2 2026, prime office rents rose 4.5% year-on-year, retail rents increased 3.0%, and logistics rents grew 2.4%, while investors remained selective as yield movements pointed to a more balanced market following the repricing cycle of recent years.

Energy

Electrica secures grid permits for 700 MWh of storage

Energy company Electrica informs investors and the capital market that it has obtained the technical grid connection permits (ATR) for 17 new battery energy storage projects (BESS), with a total capacity of approximately 700 MWh.

Energy

Romanian grid operator to support peak power consumption during heatwave

Romania's national electricity transmission network operator, Transelectrica, has halted scheduled maintenance shutdowns to ensure the grid operates at maximum capacity during an ongoing extreme heatwave. The preventive measures aim to mitigate operational risks associated with severe weather conditions.