Real estate investment turnover in Central and Eastern Europe (CEE) reached €1.2 billion in the first two months of 2011, according to new research by CB Richard Ellis (CBRE).
This figure includes the acquisition of Österreichische Volksbanken AG’s Europolis real estate unit by CA Immobilien Anlagen AG, one of the largest property companies in Austria, announced during summer 2010 but officially completed in January 2011.
The completion of this significant acquisition in January supported a further improvement in investor sentiment towards the region and liquidity is now improving in an increasing number of markets across CEE. After a considerable period of illiquidity following the global economic downturn, transaction activity outside of Central Europe has started to re-emerge. Towards the end of 2010, investment activity in South-Eastern Europe had already started to improve, a trend that has continued in 2011. Croatia, Bulgaria and Romania have seen a return of institutional investors and transactions, a recent example being the sale of a retail park in the Bulgarian regional city of Plovdiv. The scheme was purchased by Europa Capital.
Looking at other markets, Poland remains a key target market for investors and although a limited number of transactions were closed in the office sector in January and February, activity and interest in the market generally remains high. On the back of Poland’s economic performance and the state of its property market, an increasing number of investors have Poland high on their investment agenda for 2011. In the Czech Republic, no transactions were closed in the first two months of 2011 in addition to the take over of the Europolis portfolio, although activity is expected to increase in the next few months as some sizeable transactions come to completion. Hungary - a market hit hard by the financial crisis - is also witnessing a pick-up in investment activity, although the majority of this is still retail-led. After being one of the most liquid markets in 2010, Russia’s property investment market slowed down considerably in the first two months of the year, which is typical following the winter break in January.
Jos Tromp, Head of CEE research and consultancy, CBRE, commented “we foresee further increases in property investment volumes in CEE in 2011; however, the availability of quality product across the region is expected to be a key constraint on activity. In line with CA Immo’s purchase of Europolis, additional corporate acquisitions may push investment volumes up further.”
Hungarian property investment market is clearly driven by local vendors and investors, commented Gábor Borbély, CEE research analyst of CBRE Budapest. Retail schemes are of particular interest while office transaction so far did not close on the market this year. Reduced transaction size, wider geographic coverage (i.e. not only assets in Budapest) all favor investors who have the required local understanding of the market.