According to JLL, the improving economy and strong market confidence were reflected in the Slovakian real estate investment market from the start of 2015, with the industrial market currently leading as the most active.
Miroslav Barnáš, managing director and head of capital markets at JLL Slovakia, commented: “Slovakia has become an established attractive investment destination, mainly due to the availability of financing, interesting portfolio offerings, favourable market conditions and attractive pricing when compared to other core CEE markets. The total investment volume in 2015 reached approximately €412m. The number of deals outperformed last year level and we feel very positive about the investment climate in 2016.”
International players now play a dominant role in the Slovakian investment market as they have significantly increased their appetite for portfolio products, even in smaller regional cities. The gap in pricing expectations between vendors and bidders is narrowing, as bidders are now willing to employ more resources than before.
In Q3, the DNV Industrial Park was sold by Aviva's LogAxes, SachsenFonds and J&T Real Estate to CTP Invest and Immofinanz sold its industrial portfolio to Logicor, an industrial platform owned by Blackstone. The deal included LogCenter in Nové Mesto nad Váhom. The last quarter witnessed the divestment of a portfolio of three assets which was also acquired by CTP Invest. The outlined portfolio consisted of prime logistics and light industrial premises in Trnava and Nitra, as well as Westend Tower offices in Bratislava. The closing of other industrial transactions are scheduled at the start of the new year and there is the potential for a number of other portfolio transactions in 2016.
Office investment volumes increased significantly during H2 2015. Lakeside Park, a 26,000m² office scheme was purchased by TPG through the acquisition of the TriGranit business platform. In addition, Forum Business Center, an 18,500m² prime office, leased to T-com in Bratislava CBD, was sold by HB Reavis to REICO IS CS.
Retail is witnessing increasing investor interest in both prime shopping centres in the capital and smaller regional schemes across the country. In Q3, Tulip Center, a small shopping mall in Martin was sold by Pramerica to a Luxembourg entity and Laugaricio, a 30,000m² major shopping mall in the regional city of Trencin, was acquired by the Mint Investments group.
The hotel segment was also active with some deals in 2015. The most significant transaction closed in H2, in which the 5-star Kempinski High Tatras, a luxury mountain retreat destination in Štrbské Pleso, and the 4-star Crown Plaza in Bratislava, were sold by Best Hotel Properties to Redside, a fund managed by Arca Capital for a reported €56m.
In alignment with the mast situation in other parts of CEE, and as a result of improving market conditions, yields have already compressed and come in further during 2016. JLL's view on prime yields stands at 7% for offices, 6.5% for shopping centres and 8% for industrial & logistics and retail warehousing.
As core European markets continue to become increasingly tight, the CEE region is attracting more capital and witnessing high levels of real estate investment activity. At almost €9bn, 2015 represented the third highest CEE regional investment volume on record and the second highest volume on record for both Poland and the Czech Republic. While the two leading markets attracted 76% of regional volume, 2015 saw growth and continued interest in Hungary, Romania, Slovakia and the SEE region as a whole.
A full-year breakdown saw Poland lead the region in terms of real estate investment volumes with €4.1bn, a 2015 share of 46%. The Czech Republic came next (30%, a total of €2.65bn) followed by Hungary (9%, approximately €790m), Romania (7.5%, €650m), Slovakia (4.5%, €412m), and the SEE (other CEE) markets (3%, approximately €300m).
