According to Cushman & Wakefield investment activity in the core Central European markets of Poland, Czech, Slovakia, Hungary and Romania increased significantly in Q4 2012 to 1,826 million, almost matching 2007 levels, and ahead of the 536 million invested in Q3 2012. Overall, 3.71 billion was invested in the core CE markets in 2012, accounting for just 59% of the previous year's record 6.29 billion, but some 25% ahead of 2010.
Commenting on the activity in 2012, Charles Taylor, Partner at Cushman & Wakefield added "Despite investment volumes bouncing back strongly in Q4, driven by increased activity in Poland, this was insufficient to counter a lackluster performance right across the CE region during the first 9 months. That said, we now see continuing momentum in Poland and expect activity to step up in the Czech Republic. We forecast volumes in the region to be marginally ahead in 2013, with Poland continuing to be the clear favorite".
Poland delivered a strong Q4 performance with 1.63 billion transacted, reinforcing its dominance as the key destination for capital in the CE region. Overall Poland attracted 2.80 billion in 2012, an increase of 8% on the previous year. In contrast, the Czech Republic experienced a marked decrease on 2011 volumes with just 497 million transacted in 2012. Romania and Hungary also saw volumes fall on the previous year with 255 million and 146 million transacted respectively. Slovakia, which had experienced no investment activity in the first nine months, achieved just 17 million in Q4.
The sale of Zlote Tarasy and Manufaktura shopping centers were the largest transactions of the year, although significantly, investors sector preferences across the CE region shifted in 2012 from retail to offices, accounting for 37% and 45% respectively. Industrial / logistics increased its share from 8% to 13.8%, although actual volumes declined from 881 million in 2011 to 512 million in 2012. Investment into the hotel sector accounted for 4.2%.
German investors regained their dominant position in the CE region, accounting for 30% of volumes, with American and French investors responsible for 20% and 14% respectively. UK investors accounted for only 13% of investment in 2012, having dominated in the previous year.
Domestic capital continues to increase its share, albeit from a relatively low base, with active local investors including CPI, Proxy Finance and CTP (CZ), Kulczyk Silverstein Properties (PL) and Bea Development and Tatra Asset Management (SK). The Greek investor Bluehouse Capital was also acquisitive closing four transactions in Hungary and the Czech Republic.
Commenting on the prospects for the CE market in 2013, Taylor added "We expect volumes to be marginally ahead of 2012 levels, with a continued focus on prime offices and increased interest in the logistics sector. A reasonable supply of prime assets is expected to come to the market as funds liquidate and developers seek liquidity, and with a number of successful capital raisings closed at the end of last year, investor interest in the region is expected to be maintained."
Source: Cushman & Wakefield
