CEE PROPERTY INVESTMENT IN 2011 APPROACHES RECORD LEVELS
Commercial property investment turnover in Central and Eastern Europe (CEE) reached €6.9 billion by mid-August representing an increase of 20% compared to the whole of 2010 and making 2011 already the fourth strongest year in CEE history, according to the latest data from CB Richard Ellis (CBRE).
Poland and Russia remain the engines of growth in the region with over 70% of property investment volume (approx. €5 bn), while Czech Republic is close behind registering more than €1bn of property investment thus far in 2011 - an increase of over 50% compared to the whole of 2010.
Patrick O’Gorman, Director of CEE Capital Markets, CB Richard Ellis, commented: “Volumes in CEE are up on the back of strong economic and property market fundamentals especially in Poland and to a lesser extent Czech Republic. High prices for oil and commodities combined with a solid performance of the Russian economy stimulate demand for property in Russia both locally and increasingly internationally.”
For the first time since the global financial crisis affected the market in 2008, retail property investment attracted the most investment activity in the region at more than €3 billion, representing 44% of the total property investment market and in line with the wider European trend. The majority of properties transacted are high quality shopping centres located in either capital cities or large regional cities in markets such as Poland and Czech Republic. Recent transactions include Olympia Shopping Centre in Brno, Magnolia in Wroclaw, and Galeria Mokotow in Warsaw. Several of these large scale shopping centres were traded from the developer to specialised retail investors such as Unibail-Rodamco and ECE Real Estate Partners.
Industrial property investment has also registered a strong performance in 2011 on the back of several large portfolios being traded. Strengthening occupier fundamentals in a number of markets has led to several developers expanding existing capacities.
Jos Tromp, Head of CEE Research and Consultancy, CB Richard Ellis, added: “Renewed economic uncertainty across Europe will likely result in a further focus for investors on prime real estate across the region. With bond yields and interest rates low, equity markets volatile, and gold prices breaking record levels, a continuation of asset allocation into the real estate sector is expected.”
“The Hungarian market is benefiting from the generally positive sentiment in CEE”. – added Tim O’Sullivan, Head of Capital Markets in Budapest. “the turnover since the start of the year is already double compared to the whole of 2010 and there are still some significant transactions in the pipeline. Investor focus is shifting towards office properties with sustainable credentials in the short to medium term, however, 2011 turnover has been so far driven by retail sector.”