Central European investment volumes to reach € 6 billion in 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 transactions now in due diligence and expected to close in Q4, it is anticipated that 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 activitywith € 1.18 billion invested in Q3 2011. Significantly, this is ahead of investment levels in Poland which reached €864 million in Q3 2011. Year todate, this places the Czech Republic as the number 1 target market in CE with atotal of € 1.9 billion invested, ahead of Poland at € 1.82 billion. Looking atthe transaction pipeline however, we anticipate Poland will regain the top spotas we move into the final quarter.  Hungary saw a return to activity with € 197 million invested in Q3 2011,equivalent to the total volume during the period Q1 – Q3 2010.  Activity in Romania and Slovakia however,lagged behind with Q3 volumes below € 100 million.

Investor’s sector preferences in Q3 2011 saw a move from offices back to the retail sector and whilst this preference isanticipated to continue to year end, the gap between the two asset classes is likely to be narrower than in previous years. Year to date, retail investments amount to € 1.88 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 thesame period in 2010.  

Investors’ appetite for Central Europe remains strong, and whilst there is a strong focus on Poland and Czech, the diversified investor base is ensuring other markets are once again being considered.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 not with standing 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 thres hold foroffices. 

Commenting on the outlook for 2011, Charles Taylor,Partner at Cushman & Wakefield added “Transaction activity is back at 2005levels 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.”