Central European investment volumes to hit € 6 billion
4 Oct, 2011, Prague
Investment activity in Central Europe continues to accelerate, with € 2.32 billion invested in the core CE markets of Poland, Czech, Slovakia, Hungary and Romania in Q3 2011. This is significantly ahead of the € 706 million invested in Q2 2011. Year to date, investment volumes for the region stand at € 4.61 billion, more than double the € 1.95 billion invested over the same period in 2010.
Given the volume of transaction now in due diligence and expected to close in Q4, we anticipate total investment volumes for the region could reach € 6 billion by the year end.
Whilst all markets saw Q3 volumes ahead of the previous quarter, the Czech Republic experienced a marked increase in activity with € 1.18 billion invested in Q3 2011. Significantly, this is ahead of investment levels in Poland which reached € 864 million in Q3 2011. Year to date, this places the Czech Republic as the number 1 target market in CE with a total of € 1.9 billion invested, ahead of Poland at € 1.82 billion.
“The Czech Republic has had increasing investor focus for the past twelve months. However, it is only now that the deals are completing, resulting in the dramatic increase in activity. Sentiment for Europe as a whole may have cooled in the last two months but we expect a number of new deals in Q4 2011 to demonstrate that strong interest remains amongst buyers for the Czech Republic,” says James Chapman, head of Capital Markets at Cushman & Wakefield Czech Republic and Slovakia.
Looking at the transaction pipeline however, we anticipate Poland will regain the top spot as we move into the final quarter. Hungary saw a return to activity with € 197 million invested in Q3 2011, activity in Romania and Slovakia lagged behind with Q3 volumes below € 100 million.
Investor’s sector preferences in Q3 2011 saw a move from offices and back to the retail sector and whilst this preference is anticipated to continue to year end. Year to date, retail investments amount to € 1.89 billion compared to € 1.70 billion in the office sector. Investor interest in the industrial and logistics sector continues to grow with € 641 million invested so far this year, compared with € 205 million over the same period in 2010.
Notable active investors in the region to date include CA Immo, AEW Europe, Atrium, Unibail Rodamco, Deka, Union, Invesco, Heitman, ECE and Meyer Bergman, many of which have made multiple acquisitions in the CE region this year.
Across the region, strong investor demand has driven prime yields down notwithstanding that most markets offer a reasonable level of available product. Prime shopping center yields in particular have moved into sub 6% territory, although pricing is just above this threshold for offices.
Commenting on the outlook for 2011, Charles Taylor, Partner at Cushman & Wakefield added “Transaction activity is back at 2005 levels and Q4 2011 is expected to be strong in Poland, Czech and Hungary. That said, we cannot ignore the increasing economic uncertainty which is starting to impact on investor confidence and also the availability of finance, both of which could slow market activity in the closing months of this year.”
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