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.
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 center 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.
Valentin Gavrilov, Director, Research Department in CBRE, Russia, said: “The latest Investors' sentiments survey, that CBRE conducted by CBRE in the end of Q1 2013, revealed investors' readiness to increase their investments in the Russian commercial real estate. In H1 2013 we see the realization of these intentions. Some worsening of the economic forecasts for Russia, as well as the lack of positive changes in the leading indicators of the Eurozone, might cool down investment activity in H2 2013. Nonetheless, we expect that total investment volumes in 2013 might exceed 2012 figures by 10-20%.”