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07. August 2012 
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Slowdown in CEE investment market activity in Q2
The new CEE market report from DTZ Research, shows total direct commercial real estate investment declined to €327m in Q2 2012, a 60% decline quarter-on-quarter. Total investment in H1 2012 now stands at €1.2bn, markedly below the H1 average (since 2001) of €1.6bn.
Magali Marton, Head of DTZ CEMEA Research, said:
„After two years of steady growth between 2010 and 2011, investment volumes in CEE declined by 47% in H1 2012. The decline was particularly marked in Q2. However, there was some disparity between different markets in the region. The Czech Republic actually recorded an increase in investment volumes reaching €159m in Q2 following a low level (€20m) in Q1. In contrast, Poland, which usually dominates CEE market activity, registered a strong decline from €717m invested in Q1 to only €122m in Q2. These two countries represent 90% of market share in H1 2012.“
Domestic investors came back in Q2 2012 with €100m of sales in the Czech Republic and in Poland. Intra-regional investors - those located in Europe but investing outside their home markets – were less active in Q2 with volumes declining from €587m in Q1 to €156m in Q2.
Offices continue to be the preferred asset class among investors in CEE markets and accounted for 60% of the investment volume in Q2. The lack of retail assets opportunities appeared to constrain Q2 market activity. Investment in retail accounted for €106m in Q2, far below the historical quarterly average of €471m since 2010. By contrast, investment in office appeared to be more resilient with €207m of acquisitions in Q2, below the historical average at €389m.
Magali Marton continued:
„Looking forward, uncertainty surrounding the European sovereign debt crisis and weak economic growth is likely to impact investor sentiment. Furthermore, the impact of banks deleveraging is yet to be seen in the CEE countries. For the time being, local banks have proven to be resilient. However, the impact of new regulations have prompted a withdrawal of funds by foreign banks and as a result, investment is expected to contract further.“
Cristian Ustinescu, Investments Director, DTZ Echinox, adds:
„In Romania, the retail sector continued to be attractive for potential investors sustained by the increase of retail consumption registered in H1 2012 [we reported]. Romania holds the third place in retail consumption growth across UE with a 5.9% increase.“
„Prime assets in Bucharest are expected to attract foreign investors in the near future [we reported]. In this respect, we expect a moderate increase in the transaction volume for the rest of 2012. Investment volume for the whole year is expected to reach €250 / €300m, a decrease from our original €400 / €450m estimation for 2012. This estimation is based on the assumption that banks will bring to the market the assets of non-performing loans as part of their process to deleverage.“
Magali Marton, Head of DTZ CEMEA Research, said:
„After two years of steady growth between 2010 and 2011, investment volumes in CEE declined by 47% in H1 2012. The decline was particularly marked in Q2. However, there was some disparity between different markets in the region. The Czech Republic actually recorded an increase in investment volumes reaching €159m in Q2 following a low level (€20m) in Q1. In contrast, Poland, which usually dominates CEE market activity, registered a strong decline from €717m invested in Q1 to only €122m in Q2. These two countries represent 90% of market share in H1 2012.“
Domestic investors came back in Q2 2012 with €100m of sales in the Czech Republic and in Poland. Intra-regional investors - those located in Europe but investing outside their home markets – were less active in Q2 with volumes declining from €587m in Q1 to €156m in Q2.
Offices continue to be the preferred asset class among investors in CEE markets and accounted for 60% of the investment volume in Q2. The lack of retail assets opportunities appeared to constrain Q2 market activity. Investment in retail accounted for €106m in Q2, far below the historical quarterly average of €471m since 2010. By contrast, investment in office appeared to be more resilient with €207m of acquisitions in Q2, below the historical average at €389m.
Magali Marton continued:
„Looking forward, uncertainty surrounding the European sovereign debt crisis and weak economic growth is likely to impact investor sentiment. Furthermore, the impact of banks deleveraging is yet to be seen in the CEE countries. For the time being, local banks have proven to be resilient. However, the impact of new regulations have prompted a withdrawal of funds by foreign banks and as a result, investment is expected to contract further.“
Cristian Ustinescu, Investments Director, DTZ Echinox, adds:
„In Romania, the retail sector continued to be attractive for potential investors sustained by the increase of retail consumption registered in H1 2012 [we reported]. Romania holds the third place in retail consumption growth across UE with a 5.9% increase.“
„Prime assets in Bucharest are expected to attract foreign investors in the near future [we reported]. In this respect, we expect a moderate increase in the transaction volume for the rest of 2012. Investment volume for the whole year is expected to reach €250 / €300m, a decrease from our original €400 / €450m estimation for 2012. This estimation is based on the assumption that banks will bring to the market the assets of non-performing loans as part of their process to deleverage.“
