Most of Central, Eastern Europe seen as core by property investors – CBRE

EUROPE - Investors have almost doubled their investments in the Central and Eastern European (CEE) real estate markets last year compared with 2010, according to a recent study by CBRE Austria.

Approximately 11% of all real estate investments made in Europe in 2011 were made in the CEE countries, it said.

This amounts to a total investment volume of €11.2bn in CEE last year, almost twice as much as in 2010.

Andreas Ridder, chief executive at CBRE Austria, said: "Investors are still interested in core [assets] in liquid markets, mainly Germany, France, [the UK] and the Nordics, but also almost the whole of the CEE region, particularly Hungary, Slovakia, the Czech Republic and Poland."

He added that the markets in South-Eastern Europe, such as Bulgaria or Romania, were "not very interesting" for investors.

Between 2003 and 2011, the long-term annualised average investment volume in the whole of the CEE region was €4.8bn, with the record level of €15bn having been reached in 2007.

"Forecasts for 2012 are difficult, but the various CEE markets will remain attractive for investors," Ridder said.

Overall, investments in Europe have increased by 4% year-on-year in 2011 to €115bn, with investors from the UK and the US showing increasing interest, CBRE Austria said.

German open-ended funds and Austrian investors were "less active" and "very cautious" on European markets last year, with only the takeover of Volksbanken subsidiary Europolis by Austrian CA Immo having distorted statistics for the region in 2011, CBRE pointed out.

The company said: "While German (and Austrian) investors acted rather cautiously, some opportunistic investors from the UK and the US, including one new North American pension fund, rushed to the European real estate investment market bringing a fresh breeze - highlighted even more by the fact the share of investors from 'other countries' also shrunk significantly last year."

According to the real estate company, "yields all over Europe settled on a stable level in 2011".

In the fourth quarter, the wide spread between the average top yields all over Europe and the German bund yield tightened, which CBRE sees as "a significant indicator for the risk management in the real estate sector".

However, some Western European real estate markets "have reached a critical level and will have to fight for profitability in 2012", CBRE said.