Real estate investment flows into Central and Eastern Europe (CEE) rose 17% to €5.4 bn year-on-year in the first half of 2017, putting the region well on track to equal 2016’s high of €12.2 bn this year, according to new data from Colliers International.
'We forecast at end of the first quarter that 2016’s record-breaking €12.2 bn of investment in the real estate sector in the CEE region is likely to be surpassed in 2017, and the data for the first half of the year continues to indicate that scenario will happen,' commented Mark Robinson, CEE research specialist for Colliers International.
In the latest half-year data and outlook report from Colliers, the year-on-year growth experienced in Czech (114%), Romanian (155%) and Bulgarian (213%) investment volumes drove momentum in the January-June 2017 period.
Czech volumes have remained the most significant in the region so far in 2017 with flows of around €2.2 bn, reversing roles with Poland which enjoyed flows of about €1.5 bn in the first half of this year. Hungary followed in third place with €824 mln.
Retail deals dominant
Retail and hotel investment volumes rose significantly, with almost €2.6 bn of investment in retail in the first half of 2017, compared with around €3.7 bn for the whole of 2016.
Some 37% of investment volumes came from domestic sources within the CEE-6 countries or CEE cross-border flows, according to Colliers, a 16% increase compared with 2016 figures. Europe accounted for 26% of total investment volumes in the period.
Yield compression predicted
Prime yield compression in the region’s capital cities occurred in five out of the 18 key categories that Colliers tracked in the first half of 2017 versus fourth-quarter 2016 levels, most notably in Sofia and Budapest.
'We expect further compression over the next 12 months in eight out of the 18 key categories,' added Robinson.
'Looking at fundamentals, we foresee five decreases and three increases amongst the 12 key capital city vacancy rates in office and industrial that we follow. We expect rental growth in nine out of the 30 key capital city categories we track in the short to medium term. In only two do we expect a decrease. Rental growth dynamics look strongest in prime office, logistics and TSC retail arenas,' he concluded.
