Central and Eastern Europe saw almost €1.4 bn of real estate investment during the first quarter of 2014, according to global property adviser JLL.
Central and Eastern Europe saw almost €1.4 bn of real estate investment during the first quarter of 2014, according to global property adviser JLL.
This represents a 19% increase compared to the first quarter of 2013 (€1.15 bn).
Poland remained the dominant regional market with a 69% share (€940 mln) of the total CEE volume, followed by the Czech Republic (16%), Slovakia (5%), Hungary (4%) and Romania (1%), with Bulgaria, Croatia, Serbia and Slovenia making up the remaining 5%-plus. As in previous years, the majority of transactions finalised in the first quarter were initiated last year.
Troy Javaher, head of capital markets for CEE at JLL, commented: 'Poland remains the leading CEE investment destination in the first quarter, followed by the Czech Republic. However, we are seeing substantive progress regarding deals in Slovakia, Hungary and Romania. Looking ahead, we will witness increased momentum relating to cross-border portfolio and platform opportunities. This activity of scale supports the view that CEE investment volumes for 2014 are on track to match or even exceed the impressive 2013 levels'.
According to JLL, sales and acquisitions in the office segment accounted for 56% of the total investment volume in CEE, followed by retail (29%), industrial (9%) and hotels (6%).
The largest transactions all took place in Poland. The first quarter's largest CEE commercial real estate transaction was BlackRock’s sale of Warsaw’s prestigious office building - Rondo I – to Deutsche Asset & Wealth Management for €300 mln.
The retail sector was dominated by the sale of Poznañ City Center by Trigranit, Europa Capital and PKP (Polish Railways) to a consortium of Resolution Fund and ECE Fund. The parties did not disclose the investment volume but PropertyEU Research established it was in the region of €250 mln.
The largest transaction in the industrial segment in Q1 was the sale of Panattoni Park Wroclaw and Panattoni Park Blonie I from Standard Life Investments to Hillwood.
Agata Sekula, head of retail investment, Central Europe, JLL, said: 'The 19% year-on-year increase in the sales/acquisitions volume registered in Q1 2014 across CEE was possible because of the very strong opening to the year for the investment market in Poland. Taking into account ongoing transactions and the fact that Poland continues to attract foreign investors, we expect 2014’s total investment volume on the Polish commercial real estate market to be on a par with or even higher than the result in 2013.
'In the office market, we may witness more transactions of prime schemes in Warsaw and other major markets. As for the retail segment, investors will not only look for various products located in Poland's major regional cities but also further afield in the country's smaller towns and cities. In the industrial sector, investors’ attention will still be drawn to A-class facilities in major logistics locations, secured with long-term lease contracts,' she said.
According to JLL, prime office yields in Poland have slightly compressed over the last 6 months and oscillate around 6.00 - 6.25%, whereas retail yields for a 'best in class' product remain stable at 5.75%. For prime warehouse assets, yields also witnessed a slight compression and now stand at 7.25% - 7.50%.
Want to hear from experts about the latest developments and opportunities in CEE? PropertyEU is holding a CEE Investment Briefing in London on 8 May, and a at ReDI - the CEE Trade Fair for Retail Investment - on 28 May.