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CBRE: CEE property investment surge in Q1 2013

Mike Atwell, CBRE Head of Capital Markets, CEE & Poland

According to the latest report from CBRE, the world’s largest commercial real estate services company, in the first quarter of 2013 total commercial real estate investment volume in Central & Eastern Europe reached €2.6 billion.

The most active markets were Russia (€1.8 billion) and Poland (€600 million). According to the latest research CBRE, total investment volume for CEE is three times the level achieved during Q1 2012 and is also the best first quarter result in the last four years. Offices and retail continue to dominate, representing 44% and 37% of the CEE market respectively. For Poland these figures stand at 71% and 10%. Industrial properties are becoming increasingly popular and constituted 19% of total property investment volume in Q1 2013 in CEE and 17% in Poland.

In Poland significant deals were RREEF’s acquisition of Green Corner from Skanska Property Poland for  €94.6 million and Hines Global REIT’s acquisition of New City from ECI for €127 million, both in Warsaw. Although smaller economies within the CEE have also seen an increase, the largest transactions were in Moscow. Metropolis shopping centre was acquired for around €900 million by Morgan Stanley Real Estate Investing and AFI Development completed its acquisition of the remaining 50% in Aquamarine BC III, a project in close vicinity to the Kremlin.

Mike Atwell, CBRE Head of Capital Markets, CEE & Poland commented: “The upturn of interest in the CEE is entirely in line with the forecasts made in CBRE’s 2012 Real Estate Investor Intentions survey. Our 2013 research throws light on how the market may change further in the coming year. Specifically, of the 14% of investors who see the CEE as the most attractive investment choice for 2013, the majority considers Poland to be the most attractive market, and the preference for Poland exceeds that of France, Spain and the Nordics. In terms of cities, Warsaw was seen as the fifth most attractive city for purchases in 2013. Clearly this is very positive news for Poland and with improved market circumstances generally, we hope to see a knock-on effect elsewhere in the region.”

Interest in industrial properties is driven by a variety of factors including relatively low rent levels, limited development activity (although both with the exception of Russia), and a relatively high income component in total returns compared to more traditional asset classes. Przemysław Felicki, Associate Director, Capital Markets at CBRE in Poland: “Despite remaining considerably smaller than office and retail segments, industrial properties are significantly more on the radar of investors in CEE now. In Q1 we saw the completion of a transaction involving the creation of a joint venture company by Prologis and Norges Bank Investment which owns a portfolio of 195 properties in Europe, including Poland. Currently in Poland there are several transaction in progress involving both single industrial assets and whole warehouse portfolios, which should be finalized in coming months. Already in Q2 we have witnessed the completion of the purchase of Zeran Park II by Segro from by Apollo Rida/Area for €43 million.”

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