Investment Volumes Down on Previous Year

Colliers treats the region as including Poland, the Czech Republic, Hungary, Romania, Slovakia, and Bulgaria. “Despite the ongoing disruption of the pandemic, investment volumes for the three quarters of 2021, totaling EUR 7.3 bln, are down just 10% year-on-year and circa 20% lower than the same period of 2019,” said the real estate professional services firm. 

Cushman & Wakefield, meanwhile, puts CEE investment for the same period at EUR 6.7 bln, almost 13% lower than for the same period of 2020. Its definition of the region matches that of Colliers, except that it does not include Bulgaria.

“Transactions have taken longer to close, so we expect volumes to correct in the fourth quarter to come,” comments Jeff Alson, CEE partner at Cushman & Wakefield. “The lag in volume is a reflection of slower processes and not of a shortage of capital, so we expect volumes to continue to gain ground in 2022. Industrial transactions remain dominant with offices now recovering,” he adds.

Colliers estimates that the regional office sector achieved 36% of volume. Logistics and residential are continuing to record increasingly substantial volumes, held back by the lack of available products to buy. Industrial recorded 31% of the total volume, retail 16%, and residential 11%.

Regarding country share, Poland recorded 57% of the total volume, the Czech Republic 17%, and Hungary came third with 8%.

Record Yields

“The Hungarian market is ending the year strongly, with bids recently achieved at record yields for assets in both the office and logistics sector. Last year’s total investment volumes, which in themselves were not as constrained as on other markets, will probably be exceeded soon. Indeed, office transactions, the most active market sector, have already surpassed 2020 levels,” says Cushman & Wakefield.

Of note is the increased interest in Hungary from international institutional funds, some of whom have not been active in the market for more than a decade.

“Hungary still offers comparative value compared to its peer markets, and its strong occupational fundamentals are apparently being recognized,” Cushman & Wakefield notes. “Competing with them are some of the larger domestic funds who had been quiet for the previous two years but seem to be awakening, along with newer players who had come to dominate the market over this time.”

According to Colliers, Hungarian capital remained active with both domestic acquisitions and across the region, including Romania and Poland, representing 7% of the EUR 7.3 bln CEE activity.

In the latest deal in Hungary, the Austrian S-Immo has purchased the 20,000 sqm, LEED “Gold” accredited BudaPart office complex in south Buda from Market Asset Management, a subsidiary of Market Építő. The complex has an annual income of EUR 4 mln. 

Colliers estimates that CEE yearend volumes will be similar to 2020 at between EUR 10 bln and EUR 11 bln.

This article was first published in the Budapest Business Journal print issue of November 19, 2021.