The global investment community looks set to continue targeting CEE in 2020, after the region's investment volumes reached €13.7 bn for 2019, just short of the record-breaking 2018 figures, according to new data from Colliers.
Poland accounted for 55% of the CEE6 total for 2019, with the Czech Republic following with a 24% share and Hungary with 13%. Elsewhere in the region, volumes fell short of 2018 & 2017 figures.
Despite record low yields in most markets and sectors, some further yield compression is anticipated over the next 12 months as strong levels of capital seek product and returns, Colliers noted.
'The CEE region continues to be one of the most dynamic and attractive investment destinations in Europe, which is clearly evidenced in the data,' said Luke Dawson, managing director and head of capital markets, CEE.
'Both in 2019 and going forward, the investment activity was really only limited by the supply. All other factors such as domestic investment, international appetite, funding rates, and leasing show that our region continues to deserve the sustained growth it has seen,' Dawson added.
Office offensive
The office sector dominated 2019 investment activity, accounting for exactly half of all volumes. Compared to 2018, both retail and industrial deals are by down by approximately one third with hotels significantly up year on year.
CEE domestic investors were the most active during 2019, particularly Czech and Hungarian capital which was deployed both locally and cross-border within CEE. Examples of this included Hungary's Wing, which acquired a majority interest in Poland's Echo Investment, and CPI Group's busy year.
Western European capital fell just behind CEE activity, accounting for 26% of the deal volume. Capital from Asia, specifically South Korea, also increased, overtaking South African money.
Said Kevin Turpin, regional director of research, CEE: 'Overall, the diversity in the source of capital is very positive for the region and we expect this to continue as the regions fundamentals remain highly attractive.
'Looking ahead, there are a number of disrupters and enablers that will influence the way we build, occupy and invest into real estate, however, a slowdown is expected in global economies, but the extent of which is not clear.
'These will in turn have an impact on property markets although, at present, the CEE market fundamentals look quite positive and investor appetite remains strong for 2020. We hope this can be matched with available product.'
