CEE property investment outpacing 2012 by 30%

Central & Eastern Europe (CEE) commercial real estate investment volume reached €3.7 billion to the end of May 2013 – already a 30% increase when compared to the entire first half of 2012, according to the latest research from global property advisor CBRE. The Hungarian market has also started the year strongly; the turnover in the first quarter has already exceeded all of last year’s total annual investment.

Strong trading in Russia (€2.5 billion) has resulted in total property investment volumes at around two thirds of the dealings seen during 2012 overall. While Poland (around €750 million) is less active compared to previous quarters, a strong asset pipeline and several significant preliminary signings are expected to push-up investment volumes later in the year.

To date, ten transactions worth over €100 million have been closed in 2013 across CEE, confirming investor demand for substantial acquisitions. This trading of high quality, large lot sizes is expected to continue and will remain a driver of strong investment flows into CEE over the remainder of the year. A number of large scale properties and portfolios are anticipated to be signed soon, including the €400 million Silesia City Center in Katowice, a large scale shopping centre acquired by a consortium led by Allianz.

Property investors that have been considering acquiring non-prime assets are also gradually entering CEE markets as they seek to benefit from low liquidity in the non-prime segment. Interest exists in most CEE markets; however, most profoundly in the Czech Republic and Poland.

Mike Atwell, CBRE Head of Capital Markets, CEE & Poland, commented: “Investors believe that they can generate value on the back of good quality locations in combination with value-add properties, some even in regional locations. We are now seeing several investors looking more positively at the regional locations across Poland in both the retail and office sectors as long as the basic real estate fundamentals are strong and there are opportunities for value enhancement through asset management activities.”

Strong investor interest in CEE is in line with the forecasts made in CBRE’s annual Real Estate Investor Intentions survey. The research, which is completed by more than 360 high-level respondents across the property investment community, revealed that 14% of investors view CEE as the most attractive investment choice for 2013.

“Transactions valued at €151 million were concluded in Hungary, and this does not include the sales of empty assets purchased for redevelopment, a practice which is getting ever more prevalent in Budapest and in the country’s major industrial centers.”  – Gábor Borbély Head of Research & Consultancy at CBRE Budapest added.