CEE investment doubles year-on-year: CBRE

Commercial property investment volumes in Central and Eastern Europe (CEE) reached more than EUR 11.2 bn by end-December 2011 - twice the volume seen in 2010, according to the latest data from CBRE.

Significant deal flow in Russia during December 2011 pushed CEE property investment volumes over the EUR 10 bn mark, which resulted in the third strongest year in CEE history.

The largest deal was the closing in late 2011 of Galeria centre - the largest retail scheme in St. Petersburg. The 191,000-m² scheme was bought by Morgan Stanley Real Estate Investing over EUR 800 mln, as reported by PropertyEU in early October. Sources say the deal reflects a cap rate of around 9%.

Low levels of property investment activity were recorded in South Eastern Europe (SEE), with Serbia and Ukraine not seeing a single institutional transaction during 2011. However, increased investment activity has been visible in the Hungarian and Slovak commercial real estate investment markets in recent months. This trend is likely to continue, especially in Budapest, since the core segment of the market has remained mostly illiquid thus far and occupier market fundamentals have remained occupier friendly. In total, investment volumes in Hungary increased from around EUR 180 mln in 2010 to over EUR 600 mln in 2011.

Despite the fact that in some Western European markets yields have turned the corner, prime yields are expected to remain solid in markets such as Poland and the Czech Republic based on strong demand and income growth, while increasing bond yields and the poor performance of the Forint are weakening fundamentals in Hungary.