Investment in SEE hits record high as buyers look beyond core

Investment volumes in southeastern Europe reached a record level of €285 mln in 2015 as investors looked beyond the core markets for better returns, according to preliminary analysis by JLL.

The rising trend in the CEE region in the last few years has spread to Serbia and its neighbours Croatia, Bulgaria and Slovenia with the retail sector leading the way.

The trend is expected to continue into 2016, with a number of shopping centres in Serbia and Montenegro set to transact in the first quarter of the year. Total volumes for the year are projected to break through €300 mln for the first time.

The most notable deal in 2015 saw South African Atterbury Group acquire a 33% stake in Serbia’s MPC groupo, which owns a portfolio of retail assets including the country’s largest shopping centre, Usci.

Urso Grujic, head of capital markets for South Eastern Europe, JLL, said: ‘The groups of buyers we saw considering the SEE region in 2015 were mainly coming from outside the traditional markets of Germany, France and the UK.

‘Investors are attracted by the higher returns offered compared to core markets in Central Europe, and the strong performance of the retail assets in the region. To date, both NEPI and Atterbury from South Africa have invested into the Serbian retail market and we expect this trend to continue into 2016.’

Andrew Peirson, managing director for SEE and Romania, JLL, added: ‘The challenge going forward for the region will be the much-needed development of additional retail stock, particularly in Belgrade.

‘In addition, we are still waiting for investors to start taking advantage of the current state of the office sector in Belgrade, where vacancy levels are low and rent levels remain the highest in the region, offering healthy returns for foreign investors. We anticipate activity in the office sector in SEE to increase in the second half of 2016, behind retail.’