CEE commercial property investment rose impressively in the second half of 2009, bringing total 2009 turnover to EUR 2.5 bn, according to CBRE's latest report issued this week. The second part of the year saw around EUR 2 bn worth of property transacted in the market, an increase of 314% on H1 2009 turnover.
CEE commercial property investment rose impressively in the second half of 2009, bringing total 2009 turnover to EUR 2.5 bn, according to CBRE's latest report issued this week. The second part of the year saw around EUR 2 bn worth of property transacted in the market, an increase of 314% on H1 2009 turnover.
Despite higher levels of activity in H2, the 2009 market as a whole was quiet compared to recent years. Investment turnover in 2009 was 75% lower than in 2008, while the turnover for the second half of 2009 was down by 50% on the same period in 2008.
'There was a significant amount of uncertainty about economic and property market prospects in CEE heading into 2009,' said Jos Tromp, head of CEE Research & Consulting. 'As a result, investors looked for defensive properties in core locations, with long unexpired lease terms and quality tenants. This is primarily why investors focused on Central European markets, where economies have generally been more stable than elsewhere in the CEE region.'
For 2009 as a whole, Central Europe accounted for 56% of CEE turnover (37% in 2008). In particular, investors sought the relative safety of assets in Central European capital city markets, which caused the share of total CEE turnover in Prague, Warsaw and Budapest to increase to 34% in 2009, compared to 21% in 2008. Meanwhile, Southeastern Europe's share fell to 12% in 2009 (25% in 2008), reflecting investor uncertainty about its economic and property prospects, and Eastern Europe's share of turnover fell from 37% in 2008 to 32% in 2009.
Offices received the largest share of investor attention for most of 2009 in CEE, although the retail investment market began to show signs of life at the end of 2009. 'The focus on office assets for much of 2009 reflected investors' aversion to risk and the limited availability of top retail product across CEE,' said Tromp.
As a result, 44% of CEE turnover for 2009 was for office properties, compared with 38% of the market in 2008. In contrast, the retail investment market was quiet for most of 2009, with a sharp pick-up in activity during the fourth quarter of the year.
Tromp also noted that local investors drove the CEE property investment market in 2009 to a greater extent than in recent years. 'This was particularly the case in Russia, where local investors accounted for 56% of 2009 turnover,' he concluded.