According to Jones Lang LaSalle’s CEE Investment Market Overview, in H1 2013 over 50 investment transactions of approximately €1.74 billion have been recorded in CEE. This represents a 38% y-o-y increase compared to volumes in H1 2012. Czech Republic is the second biggest regional market with a share of approximately 23% in the CEE followed by Hungary (10%), Slovakia (8%) and Romania (4%). Poland remains the leading CEE market with 56% share. In contrast, Bulgaria, Croatia and Serbia have yet to record any investment activity in 2013.
Offices transactions accounted for approximately 60% of all deals and almost 70% of the investment volume in CEE. This was followed by retail transactions with approximately 30% of deals and around 20% of the investment volumes in CEE.
Troy Javaher, Head of Capital Markets, CEE, commented: “Although the overall economic outlook in the CEE remains varied, we have observed increased investor activity in the region during the first 6 months of 2013, with Poland leading the pack, and the Czech Republic, Hungary and Slovakia significantly enhancing their position. With a number of key transactions expected to close during the second half of the year, we forecast 2013 volumes to come in at around €3.5 billion, which would be close to the €3.84 billion figure recorded in 2012”.
Significant year-on-year improvement on the Czech market
The total investment volume recorded in H1 2013 amounted to slightly in excess of €400 million. The vast majority of deals took place within the city of Prague, accounting for approximately 60% by traded volume. In terms of individual transaction volumes, the largest office deal was the purchase of Andel Park, a prime office building. With an area in excess of 18,000 m², the Prague 5 located asset was acquired by GLL Partners from German open ended fund SEB, for a price of reportedly circa €65 million.
The most active sector in H1 was the office market with a total volume of almost €200 million. During the first half of 2013, there were no regional office transactions, with investors continuing to concentrate on the capital city. Notable transactions included eight property assets across the whole spectrum of pricing and strategic sectors. Mercury Business Centre in Prague 7 was acquired from Sberbank by PSN, whilst at the other end of the spectrum, Trianon at Budejovicka in Prague 4 was purchased by REICO from Union Investment for circa €54 million.
Other transactions included the purchase of the office element of Galerie Butovice, sold by ING Bank to a private investor, the sale TMW Pramerica’s CBD office buildings Stara Celnice to Invesco RE and Dvorana Office Centre in Prague 9 to Alder Capital SE. A private investor acquired Golden Cross from CPDP for circa €16 million.
In the retail sector, investment volumes amounted to €62 million. Greek fund, Bluehouse Capital, purchased Shopping Centre Rynovka in Jablonec nad Nisou from CPDP making this the third Interspar anchored investment in its Czech portfolio. Standard Life acquired the remaining share capital in the sale of Pradera’s retail warehouse parks in Olomouc and Ostrava for circa €30 million, whilst the Parada Retail Park in Ceska Lipa was purchased by Pragorent from Lordship.
The volume in the industrial sector reflected a 75% increase compared to H1 2012 and was driven by the portfolio sale of a 50% stake in the Prologis European Portfolio to Norges Bank and the disposal of Pilsen West, a newly built manufacturing asset from Japanese Kajima to a joint venture of NBGI and Panattoni.
Final trading volumes were accounted for mainly by the sale of Palace Hotel by Warimpex to a private Czech Investor. The new owner is set to take over operations from Vienna International Hotelmanagement AG.
Stuart Jordan, Head of Capital Markets for the Czech Republic said: “A certain level of confidence and liquidity has returned to the Czech Real Estate market in H1 2013, evident through investment volumes exceeding €400 million and the significant year-on-year improvement this represents against H1 2012. A number of transactions signed in H1 are not formally closed yet, but these would likely represent a year-on-year three-fold volume increase - an example being the disposal of The Park, a 116,000 m² Business Park campus, sold by Aberdeen DEGI to Starwood Capital Finance, formally closed at the start of July.
"This improved liquidity situation is reflected by the significant number of commercial investment transactions in formal diligence (estimated at circa €0.5 bln) and combined with the a narrowing price delta between vendor and purchaser expectations enforces our view that full year investment volumes will be well in excess of the €1 billion mark.”
Source: Jones Lang LaSalle