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25. August 2011     Print Print 

CEE Property Investment in 2011 approaches record levels

Commercial property investment turnover in Central and Eastern Europe (CEE) reached €6.9 billion by mid-August representing an increase of 20% compared to the whole of 2010 and making 2011 already the fourth strongest year in CEE history, according to the latest data from CB Richard Ellis (CBRE).

Poland and Russia remain the engines of growth in the region with over 70% of property investment volume (approx. €5 bn), while Czech Republic is close behind registering more than €1bn of property investment thus far in 2011 - an increase of over 50% compared to the whole of 2010.

Patrick O’Gorman, Director of CEE Capital Markets, CB Richard Ellis, commented:
“Volumes in CEE are up on the back of strong economic and property market fundamentals especially in Poland and to a lesser extent Czech Republic. High prices for oil and commodities combined with a solid performance of the Russian economy stimulate demand for property in Russia both locally and increasingly internationally.”

For the first time since the global financial crisis affected the market in 2008, retail property investment attracted the most investment activity in the region at more than €3 billion, representing 44% of the total property investment market and in line with the wider European trend. The majority of properties transacted are high quality shopping centres located in either capital cities or large regional cities in markets such as Poland and Czech Republic. Recent transactions include Olympia Shopping Centre in Brno, Magnolia in Wroclaw, and Galeria Mokotow in Warsaw. Several of these large scale shopping centres were traded from the developer to specialised retail investors such as Unibail-Rodamco and ECE Real Estate Partners.

Industrial property investment has also registered a strong performance in 2011 on the back of several large portfolios being traded. Strengthening occupier fundamentals in a number of markets has led to several developers announcing plans to expand in CEE often through Joint Ventures (JV). An example of this trend is Pramerica’s JV with Panattoni Europe. High quality logistics schemes leased to strong tenants form the basis of institutional interest in the logistics sector in CEE.

Jos Tromp, Head of CEE Research and Consultancy, CB Richard Ellis, added:
“Renewed economic uncertainty across Europe will likely result in a further focus for investors on prime real estate across the region. With bond yields and interest rates low, equity markets volatile, and gold prices breaking record levels, a continuation of asset allocation into the real estate sector is expected. Since most equity buyers left the markets, available financing remains one of the most important features in the current market. On the other hand, private equity is active on the market again.”