Investors continue to target central Europe

CE quarterly investment volumes - graph
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€958 million invested in Q1 2013, with activity returning to Czech

According to Cushman & Wakefield, investment activity in the key Central European markets of Poland, Czech, Slovakia, Hungary and Romania was maintained in the first quarter of 2013 with €958 million invested, some 6% above the 5 year average. Whilst down on the previous quarters €1.826 billion, positive investor sentiment and underlying activity suggests investment volumes for the year should match those achieved in 2012.

The Czech market saw a recovery in Q1 with 6 transactions closed and volumes up at €237 million, compared with just €20 million for the same period in 2012. Polish market saw volumes decline in Q1 2013 with €465 million invested compared to €818 million in Q1 2012. Hungary attracted €159 million in Q1 2013, significantly up on the same period in 2012.

Commenting on the Czech market, James Chapman, head of Capital Markets at Cushman & Wakefield Czech Republic and Slovakia, said: “The Czech Republic is rising again after a quiet 2012. The strong start to 2013 is expected to continue into Q2 with several additional deals anticipated to complete during the coming weeks. Several large transactions are expected to happen later in the year further confirming the growth in the market and the increasing stability of the real estate sector. Czech and international investors are equally as active at present with particular focus on offices and retail.”

Investors’ sector preference remained in the office sector with some €646 million invested into offices with significant transactions including the purchase of New City in Warsaw by Hines, PZU’s purchase of Skanska’s Green Towers in Wroclaw and the purchase of Andel Park B in Prague by GLL. Allianz, Invesco, NEPI, Kulczyk Silverstein Properties and Hannover Real Estate also made investments into the office sector in this quarter. Retail investment activity by contrast was at its lowest since 2009. 

Commenting on the prospects for the remainder of the year, Charles Taylor, Partner at Cushman & Wakefield added “We remain optimistic for the region, evidenced by a strong pipeline of transactions in due diligence. Investor demand continues to be patchy, being country and sector focused with an emphasis on core product located in liquid markets. That said, we are encouraged to see activity returning to the Czech market, partly as a result of some re-pricing”.