Markets Waiting for Governments to hit the Play Button

Sustainability

The preliminary investment volumes for Central and Eastern Europe (Poland, Czech Republic, Slovakia, Hungary, Romania and Bulgaria) for the first quarter of 2020 reached circa EUR 3.7 billion, despite the onset of COVID-19 in CEE at the beginning of March, according to Colliers International.

This volume was significantly boosted by the EUR 1.3 bln acquisition of the Residomo portfolio in Czech Republic by Heimstaden.

Traditionally, Hungarian investment volumes are in third place after Poland and the Czech Republic for the region. However, Hungary was behind Slovakia and Romania in Q1 in fifth place.   

“Many of the transactions were already in advanced stages at the onset of the virus. So, these figures will not really provide the answer, as the whole situation is quite unique and different to other past crises,” Colliers warns.    

After a record-breaking year in 2019, Poland maintains its leading position in the region with a 48% share of the first quarter volume, followed by Czech Republic with 39%, Slovakia 5%, Romania 4% and Hungary with 2%.

“Due to the various measures imposed to keep people safe and prevent the spread of the virus, including flights and border restrictions, we expect that the volumes in Q2 and Q3 will be significantly impacted as all parties involved in transaction processes are largely unable to meet or visit properties,” comments Kevin Turpin, regional director of research for CEE at Colliers.

Holding Off

In the current climate, many property owners and managers are currently assessing and managing any risks to their assets.

According to initial results from an ongoing Colliers survey, investor appetite remains strong, the volume of capital for deployment also remains and could potentially increase, but many investors will hold off decisions for a number of weeks until the situation becomes clearer. That is particularly true in regard to financing, pricing and the ability to physically view potential opportunities.

“All of the above outlook is subject to how long the pandemic will continue to impact on our lives, to what extent damage is caused economically and how all active players can recover and adapt to the changes that will certainly come. After all, whether you are a developer, bank, investor, occupier or advisor, there will be an impact for all,” says Colliers.

With regard to market sectors, Colliers’ research indicates that 27% of investors have a preference for office, 26% have a preference for industrial and 8% for retail. This reflects the widely held view that retail and hotel are the worst hit sectors from the lockdown measures, though both had previously expected strong levels of activity.

“Investment perspectives have been changing in the last few weeks as restrictions have been lifted and there is a new sense of optimism,” said Luke Dawson, managing partner and head of capital markets for CEE at Colliers, speaking at the “New Investment Cycle in CEE/SEE: If & When” web seminar.

“Capital is being deployed to CEE and in the last few weeks we have had three new mandates. With regard to sectors we are seeing investors looking at industrial more than ever,” he concluded.

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