Real estate investment turnover in Central and Eastern Europe (CEE) reached €4.4 billion in the first five months of 2011, according to new research released by CB Richard Ellis (CBRE).
This figure indicates an increase of 180% of the year-to-date volume compared to the same period 2010. In a growing number of markets liquidity has started increasing supported by growth of both the number as well as the size of the transactions.
Despite investment activity spreading into a wider range of CEE markets, investor focus has remained on Poland, Czech Republic and Russia. The Czech Republic saw the most significant increase in investment on the back of some large portfolio transactions closing. Income security and quality remain high on the agenda. Consequently, an increase in liquidity in the secondary segment has not become visible thus far.
“Volume was driven by activity in the core markets. Specific retail assets and city centre offices have seen the most demand from investors in Poland and Czech Republic, mainly due to the high rental growth prospects,” Patrick O’Gorman, director at CEE Capital Markets, CBRE, said.
In line with an increase in cross-border investment activity, the number of large transactions closing has increased. Out of the total 2011 volume close to 60% was part of a portfolio, marking a considerable change in recent months. Examples of sizeable transactions include the sales of the Ritz Carlton hotel and White Square BC in Moscow as well as well as the VGP-portfolio in Czech Republic. Apart from increasing Austrian interest, a more active group of UK investors was registered in the region in search of ‘value for money’. The trend of increased cross-border investment is currently applicable to Russia as well, after having an almost entirely local investor base in Q1 2011.
“Based on the still considerable yield premiums in markets such as Budapest and Bucharest – compared to Warsaw and Prague –, activity is expected to increase in these markets towards the end of the year,’ said Gábor Borbély, senior analyst at CEE Research and Consultancy, CBRE.