First European Title Insurance Company Limited (“First European”) is a specialist insurance company that helps protect investments of property owners, lenders, developers and investors alike. The company operates in many countries across Europe, from Poland to Romania, Hungary, Bulgaria, etc. 

You've been working for 13 years with First European; how did your career path lead you to this field?

I started my career in banking & finance in the UK when I was 20 years old.  After about 5 years I became interested in working abroad and CEE drew my attention, it felt like a region with a lot to offer in terms of growth, and so I moved to Poland and worked in real estate for an international executive search company. This has brought me in contact with numerous industry professionals and also consolidated my knowledge about the local market. I then joined what was First Title in 2008 (and subsequently its sister company, First European,  following Brexit) and this was a good match for my expertise in real estate & finance.

Before diving deeper into First European's business, can you clarify what is "title insurance" and what makes it useful for real estate companies?

In its simplest form, a "title insurance" protects against legal defects with respect to rights of ownership or use of a property. In other words, it helps mitigate any risks the property might become associated with, for example, restitution, boundary disputes, invalid tenders, disputed transfers etc. It is a relatively niche product but is applied to many functions and types of property from simple land plots through to shopping centers, offices, warehouses, logistics, but also hotels, student accommodation wind & solar farms etc.

The historical background of the CEE region, with its divided ownership and problematic land registry creates an obvious need for title insurance. Poland and Romania in particular suffer from restitution and reprivatization issues, which is why foreign investors sometimes hesitate to place their money here.

A title insurance policy can be very reassuring for foreign investors, or those investing outside their usual jurisdiction. The arrival of US investors into the region helped facilitate its use because this instrument has a strong tradition in the US, where it has been in use for more than one hundred years.

Seeing that title insurance is a newer product for CEE, what can you tell us about the market response? Was it difficult to demonstrate its value to potential clients?

Surprisingly, in the initial stages there was a lot of uncertainty coming directly from the legal community as to how the product could support the transaction process and not interfere with their due diligence work. In 2008 we would typically see penetration rates of fewer than one in ten transactions using a title insurance, however, in 2020 the ratio grew to eight or nine out of ten, which really shows the maturity and acceptance of the product in CEE.

An interesting evolution took place around 2011, on the background of the global financial crisis: the market evolved in such a way that sellers became even more interested than buyers in using title insurance, because they wanted to mitigate the risks of their properties in advance, and make them more attractive for potential investors. We started to field more enquiries on the sell side of the transaction and this was probably the first step in replacing warranties to title with insurance in a transaction

Interesting development indeed, have you noticed any relevant shifts in mindset during the crisis we are facing nowadays?

From a value perspective, there have been fewer single asset transactions that exceed EUR 100 million during the Covid outbreak  and I imagine that most investors will want to see how the office market adapts following the pandemic. In this context, residential for rent schemes and logistics deals have prevailed because their value is usually within the range of EUR 20 to 50 million. All in all, we have maintained our market share and are in good position as lockdown restrictions start to ease.

Thinking of the near future (2-3 years), what are First European's plans in Poland & Romania?

The plan is to continue to grow through new product development, specifically new lines of insurance that the market demands. We have seen a growing interest in our "loss of rent" product which means investors want to protect their income stream if they are to lose ownership of the building. Oure "title to shares" product is also continuing to grow s, as well as our "planning & permit cover" which seems to be a rising requirement, especially in the industrial sector.

What would be a final message for the foreign investors that are interested in the Polish & Romanian real estate markets?

There is increasing competition in the real estate sector throughout the CEE region, especially in Romania & Poland where development is in its prime now. Poland has shown that with the right mentality investors can thrive in its local real estate market. Even though it is perceived to be behind infrastructure wise, Romania is a very promising market too. As a bottom line, there is still a huge undiscovered potential in the region and those who are wise will take advantage of it.