Investment into central and eastern European countries (excluding Russia) for 2015 reached a historic high level at over €9.55bn, representing a 19% increase y-o-y, with the retail sector proving the most fruitful.
CBRE's recent Marketview Snapshot report revealed that the Czech Republic and Poland put in a particularly strong performance, recording investment volumes of €2.7bn and €4bn respectively, also posting strong growth in transaction volumes along with Hungary and Serbia.
High appetite for quality retail products continued in 2015; the sector accounted for 43% of the total investment volume for CEE. This substantial y-o-y increase of over 160% is based on a multitude of large investment deals on prime, dominant shopping centers located in Czech Republic and Poland.
Investment into core-CEE countries (Czech Republic, Hungary, Poland, Slovakia and Romania) reached €8.4bn in 2015, a 14% increase on 2014 numbers and well above the forecast numbers. Poland’s performance was driven by outstanding macro-economic growth and stability, while growth in the Czech Republic was led by two large investment deals signed in 2015, including the country’s largest ever property transaction – Union Investment’s acquisition of a majority share in the Palladium shopping center in Prague for €570m.
Hungary’s investment volume, up 42% y-o-y, is set to rise in 2016 as investors are showing increasing interest in making investments. Transactions could go towards the dominant retail sector, where retail turnovers have risen by double digits in some areas. The drop in investment volume for Romania should be seen in the context of an unusually strong 2014, driven mainly by one major one-off deal. Excluding this effect, Romania's performance was robust and on par with expectations. Looking ahead, Romania and Slovakia are earmarked for success with increased interest being shown from investors. Larger deals are expected to be seen in Serbia, Croatia and Slovenia with investors looking to have a presence in these markets.
Gijs Klomp, head of CEE Investment Properties, CBRE, commented: “This year we have seen strong investment into the region as investors from within Europe are looking to take advantage of relatively high yields and strength of available stock on the market. In 2016 we expect this to continue as the stage is set for strong economic growth in the CEE, relatively high yields compared to Western Europe and increasing interest from banks to finance in the region. In addition, another major factor which will contribute to higher interest is the strong expansion seen in the retailers’ reported sales across the region. We also expect to see an increasingly diverse investor profile as Asian investors aim to increase their presence within the area.”
