CEE investment approaching record levels: CBRE

Real estate investment reached EUR 6.9 bn in Central and Eastern Europe (CEE) in the first eight months of this year, an increase of 20% compared to the whole of 2010, data from CB Richard Ellis indicates. The international property adviser said 2011 is already the fourth strongest year in CEE history.

Poland and Russia remain the engines of growth with over 70% of property investment volume, while Czech Republic is close behind registering more than EUR 1 bn of investment - an increase of over 50% compared to 2010.

'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,' said Patrick O’Gorman, director of CEE Capital Markets at CBRE. '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 EUR 3 bn, or 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.

'Renewed economic uncertainty across Europe will likely result in a further focus for investors on prime real estate across the region,' added Jos Tromp, head of CEE Research and Consultancy at CBRE. '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.'