Central Europe volumes to reach EUR 5b by end-2011: C&W

Real estate investment in Central Europe continues to gain momentum with EUR 2.09 bn invested so far this year in the core markets of Poland, the Czech Republic, Slovakia, Hungary and Romania, according to Cushman & Wakefield. The property adviser suggests that total volumes for the region could reach EUR 4.8 bn by the end of the year.

Poland continues to dominate the region, however it was the only market to see transaction volumes fall in the first six months of 2011, to EUR 875 mln compared with EUR 1.3 bn for the second half of 2010. By contrast, the Czech Republic and Hungary experienced strong recoveries over the same period, with Czech volumes jumping from EUR 295 mln to EUR 744 mln, and Hungary increasing from EUR 78 mln to EUR 233 mln. In all Central European markets, transactional activity still lags behind the five-year average.

Portfolio deals were prevalent in H1 2011, occurring in all markets and accounting for over 60% of the total transaction volume. The CA Immo acquisition of Europolis extended to EUR 850 mln, whilst others included the VGP/ AEW Europe industrial joint venture at EUR 300 mln and CPI's acquisition of the Family Centers retail portfolio for EUR 63 mln in the Czech Repbulic and Slovakia. Overall, 69 properties traded hands in H1 2011.

Investors' sector preference shifted to the office sector in H1 2011. Cushman & Wakefield expects this to be short-lived, however, as a significant increase in retail investment activity in recent months will see retail volumes accelerate in Q3 and Q4 as these deals are finalised. Retail volumes for the first six months of 2011 fell back to EUR 623 mln from EUR 1.12 bn in H2 2010. Office volumes increased to EUR 947 mln, up from EUR 466 mln. Industrial investment volumes were also up significantly, from EUR 128 mln to EUR 511 mln, largely as a result of the VGP transaction.

As investment activity in Central Europe continues to accelerate, investor types and capital sources remain varied. Notwithstanding the dominance of CA Immo's acquisition, 'big ticket' investors in H1 2011 include AEW Europe, Atrium, Deka, Union Investment, Invesco, Pradera and ECE. CPI and Erste remain the key domestic investors in the Czech/Slovak and Hungarian markets respectively. New investors are now emerging, as they adjust their risk tolerances and expand their interest from core western markets, Cushman & Wakefield said.