CEE investment activity hits EUR 1.2b so far this year

Real estate investment turnover in Central and Eastern Europe (CEE) reached EUR 1.2 bn in the first two months of 2011, according to new research released on Tuesday by CB Richard Ellis (CBRE). This figure includes the acquisition of Oesterreichische Volksbanken's Europolis real estate unit by CA Immobilien Anlagen, one of the largest property companies in Austria, announced during summer 2010 but officially completed in January 2011.

According to CBRE, the closing of this deal supported a further improvement in investor sentiment towards the region and liquidity is now improving in an increasing number of markets across CEE. After a considerable period of illiquidity following the global economic downturn, transaction activity outside Central Europe has also started to re-emerge. Towards the end of 2010, investment activity in Southeastern Europe had already started to improve, a trend that has continued in 2011. Croatia, Bulgaria and Romania have seen a return of institutional investors and transactions, a recent example being the sale of a retail park in the Bulgarian regional city of Plovdiv to Europa Capital.

Looking at other markets, Poland remains a key target market for investors and although a limited number of transactions were closed in the office sector in January and February, activity and interest in the market generally remains high. On the back of Poland's economic performance and the state of its property market, an increasing number of investors have Poland high on their investment agenda for 2011.

In the Czech Republic, no transactions were closed in the first two months of 2011 outside the takeover of the Europolis portfolio, although activity is expected to increase in the next few months as some sizeable transactions come to completion. Hungary - a market hit hard by the financial crisis - is also witnessing a pick-up in investment activity, although the majority of this is still retail-led. After being one of the most liquid markets in 2010, Russia's property investment market slowed down considerably in the first two months of the year, which is typical following the winter break in January.

'We foresee further increases in property investment volumes in CEE in 2011; however, the availability of quality product across the region is expected to be a key constraint on activity,' said Jos Tromp, head of CEE Research and Consultancy, CBRE.