Investment activity in Central Europe in the first half of 2011 continues to gain momentum, with €2.1 billion invested so far in the core markets of Poland, Czech, Slovakia, Hungary and Romania, according to Cushman & Wakefield. This is ahead of the €1.83 billion invested in the second half of 2010 and suggests that total volumes for the region could reach €4.8 billion by year’s end.
Poland continues to dominate the region, however, it was the only market to see transaction volumes fall in the first 6 months of 2011, to €875 million compared with €1.27 billion for the second half of 2010. In contrast, Czech and Hungary experienced strong recoveries over the same period, with Czech volumes increasing from €295 million to €744 million, and Hungary increasing from €78 million to €233 million. In all Central European markets, transactional activity still lags behind the 5 year average.
Investor’s sector preferences saw a move to the office sector in H1 2011. We expect this to be short-lived, however, as a significant increase in retail investment activity in recent months will see retail volumes accelerate in Q3 and Q4 as these deals are finalized. Retail volumes for the first 6 months of 2011 fell back to €623 million from €1.12 billion in H2 2010, whilst office volumes increased to €947 million, up from €466 million. Industrial investment volumes were also up significantly, from €128 million to €511 million, largely as a result of the VGP transaction.
As investment activity in Central Europe continues to accelerate, investor types and capital sources remain varied. However, the dominance of CA Immo’s acquisition, ‘big ticket’ investors in H1 2011 include AEW Europe, Atrium, Deka, Union, Invesco, Pradera and ECE. CPI and Erste remain the key domestic investors in the Czech/ Slovak and Hungarian markets respectively. New investors are now emerging, as they adjust their risk tolerances and expand their interest from core western markets.
“Transaction activity is expected to accelerate further in Q3 and Q4 with investment volumes in all markets expected to outperform 2010 levels by some margin. Whilst activity in H1 2011 might suggest investors’ sector preference has moved to offices, the limited retail activity is more a reflection of the constrained supply,” said .Charles Taylor, Partner at Cushman & Wakefield added, commenting on the outlook for the remainder of the year.
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