Central and Eastern European (CEE) investment turnover reached over 1.5 billion in the third quarter (Q3) of 2010, nearly a 60% increase on Q2 2010 figures, according to the latest data by CB Richard Ellis (CBRE).
CEE accounted for the largest quarter-on-quarter growth in investment volumes in the European region mostly on the back of higher activity levels in Poland and Russia. These two countries together accounted for 75% of the regional investment total in 2010 while other CEE markets are still witnessing low levels of liquidity.
The average transaction size in CEE has increased to 70 million in Q3 2010 due to some large single asset and portfolio sales. The largest single asset transaction in CEE on record so far in Q3 2010 was a business park transaction in Russia for approximately 285 million. Two significant portfolios were traded: Panattoni sold a logistics portfolio to Standard Life Investments and Unibail-Rodamco acquired a portfolio of two shopping centers in Warsaw from Simon Ivanhoe as part of Pan-European shopping center portfolio. Increased activity, combined with a growing average transaction size underpins the idea that certain banks are once again showing increased interest in financing in certain markets in CEE.
Patrick O'Gorman, CB Richard Ellis Director of Capital Markets, CEE, commented: "The slowdown in activity from the German Open-ended Funds (GOEFs) in Q3 2010 reflects the recent changes in the GOEF-sector. Unlike in the first two quarters of 2010, GOEFs did not close any transactions in the CEE region in Q3 2010. However many GOEFs have several office properties under offer in Poland and plan to close before the end of the year. Warsaw in particular has experienced renewed interest in the office market, as there is a general consensus that the occupational market has reached the bottom of the cycle."
Poland and Eastern Europe were the only markets with prime yield compression continuing in line with investor interest in Q3 2010. Prime yields in Eastern Europe registered a 50-100 basis points (bps) downward movement with prime yields in Warsaw compressing by 35-50 bps, with the exception of retail where prime yields remained stable at the end of Q3 2010. Softening prime yields have been visible only in Bucharest where prime shopping center yields increased by 25 bps on the back of weakening consumer sentiment following a significant VAT increase and public sector wage cuts.
Source: CB Richard Ellis