Central European Investment Volumes Bounce Back in Q4

According to Cushman & Wakefield investment activity in the core Central European markets of Poland, Czech, Slovakia, Hungary and Romania increased significantly in Q4 2012 to €1,886 million, almost matching 2007 levels, and ahead of the €536 million invested in Q3 2012. Overall, €3.77 billion was invested in the core CE markets in 2012, accounting for just 59% of the previous year’s record €6.29 billion, but some 25% ahead of 2010. 

Commenting on the activity in 2012, Charles Taylor, Partner at Cushman & Wakefield added “Despite investment volumes bouncing back strongly in Q4, driven by increased activity in Poland, this was insufficient to counter a lackluster performance right across the CE region during the first 9 months. That said, we now see continuing momentum in Poland and expect activity to step up in the Czech Republic. We forecast volumes in the region to be marginally ahead in 2013”.

Poland attracted €2.80 billion in 2012, an increase of 8% on the previous year. In contrast, the Czech Republic experienced a marked decrease on 2011 volumes with just €550 million transacted in 2012. Romania and Hungary also saw volumes fall on the previous year with €255 million and €146 million transacted respectively. Slovakia, which had experienced no investment activity in the first 9 months, achieved just €17 million in Q4.

The Czech Republic is expected to come out of the shadow of Poland during 2013 leading to an increase in transaction volume. “The fear of overheating in the Polish market is leading to investors coming to Czech in search of more attractive yields,” says James Chapman, Partner and Head of Capital Markets in the Czech Republic. “Better quality assets becoming available as well as stable fundamentals will drive up investment volumes in Prague in 2013.”

German investors regained their dominant position in the CE region, accounting for 30% of volumes, with American and French investors responsible for 20% and 14% respectively. UK investors accounted for only 13% of investment in 2012, having dominated in the previous year. 

Domestic capital continues to increase its share, albeit from a relatively low base, with active local investors including CPI, Proxy Finance and CTP (CZ), Kulczyk Silverstein Properties (PL) and Bea Development and Tatra Asset Management (SK). The Greek investor Bluehouse Capital was also acquisitive closing 4 transactions in Hungary and the Czech Republic.

  

Top 10 Property Investors in Central Europe in 2012

Investor

Property

Total ( millions)

Unibail-Rodamco

Zlote Tarasy, Warsaw

475

Union Investment

Manufaktura, Lodz

390

Allianz

Warsaw Financial Center, Warsaw

Platinum Business Park, Warsaw

322

Deka

International Business Center, Warsaw

Intercontinental Hotel, Warsaw

City Green Court, Prague

303

Blackstone

Galeria Tęcza & Galeria Twierdza (phase II), Poland

Panattoni Portfolios, Poland

263

Heitman

Marynarska Business Park, Warsaw

Galeria Tarnovia, Poland

144

Griffin

Prima Court, Warsaw

Renoma, Poland

133

Proxy Finance

City Tower, Prague

130

Hines

Prologis Portfolios, Poland

117

NEPI

City Business Center, Romania

92

Commenting on the prospects for the CE market in 2013, Taylor added “We expect volumes to be marginally ahead of 2012 levels, with a continued focus on prime offices and increased interest in the logistics sector. A reasonable supply of prime assets is expected to come to the market as funds liquidate and developers seek liquidity, and with a number of successful capital raisings closed at the end of last year, investor interest in the region is expected to be maintained.”