CENTRAL EUROPE INVESTMENT MARKET OVERVIEW Q2
According to global property adviser Cushman & Wakefield, investment activity in the Central European markets of Poland, Czech Republic, Slovakia, Hungary and Romania maintained momentum with EUR 881 million invested in Q2, combining to total EUR 2.21 billion invested in the region year to date. However given the significant pipeline of transactions, year end volumes are expected to exceed 2014 levels.
Commenting on the activity in Q2 2015, James Chapman, Partner, Head of CE Capital Markets at Cushman & Wakefield, said, “Q2 has been all about making significant progress with deals that are now expected to close between July and September. Q3 2015 is going to be a record period for investment volumes in all countries across the CE region based upon the advanced status of numerous deals.”
Investors preference for the office sector increased with EUR 394 million traded in Q2 2015 (a 158% growth quarter-on-quarter). Retail and industrial saw weaker activity in Q2 than in Q1 with volumes at EUR 380 million and EUR 52 million respectively (down by 51% and 87% compared with Q1 2015). Considering H1 2015, however retail activity was up 55% on H1 2014, and industrial by a moderate 12% on the same period. Retail will be a big driver of growth in H2 2015.
Poland saw the highest volume of transactions over the second quarter (EUR 365 million), furthermore half year results show that the Czech Republic and Poland continue to attract the strongest investor interest. However, Hungary was the only country seeing higher activity than in Q1 and was also the only country seeing recent activity volumes above the 5 year quarterly average.
The largest portfolio deal in Q2 was Aviva’s sale of their ten asset strong mixed use CE portfolio for a reported EUR 185 million, whereby Lone Star acquired assets across the Visegrad countries. The largest single asset deal concluded in Prague with the sale of Arkády Pankrác shopping centre for EUR 162 million which Cushman & Wakefield’s Capital Markets team advised on.
Commenting on the prospects for the remainder of the year, James Chapman added “We are optimistic in our forecasts for the region, demonstrated by a strong pipeline of transactions in due diligence. We continue to see strong investment inflows across office and retail sectors. Prime yields have gone below 6% for landmark properties and retail investments have gained significant momentum. Although the difficult situation in Greece influencing the Eurozone, the evidence to date is that volumes in Central Europe will be stronger this year than last and will reach EUR 7.5 billion.”