CEE office investment jumps 100% in H1

Central & Eastern Europe (CEE) office investment volume reached €1.7 bn in the first half of 2013, reflecting an increase of over 100% compared to the same period the year before, CBRE reports.

H1 2013 was the second most active period for office investment since the start of the 2008 financial crisis. The traditionally strong markets of Poland and Russia dominated with almost 75% of investment but deal flow is slowly becoming visible in other parts of the region, including Czech Republic and Romania.

Institutional investors who are in the process of restructuring their portfolios and some distress coming to the markets are reasons behind this emerging trend, CBRE said.

However, slow economic growth and tenant favoured market conditions are slowing a wider increase of office investment volumes in CEE, with limited activity in the smaller markets of Southeastern Europe. Investors perceive these smaller and less liquid markets clearly as value-add territory especially for office investment.

Mike Atwell, CBRE head of capital markets, CEE & Poland, commented: 'Developers and investors need to contend with lower effective rents when marketing their office properties in today’s market situation. Secondary locations will suffer more significantly than buildings that are able to offer contemporary office space in well established and attractive locations. Ultimately a location decision will not be made entirely based on rental levels, as employee requirements are becoming ever more important.'