Property deal lot sizes half in Central Europe

Average lot sizes of real estate transactions in Central Europe (CE) have roughly halved compared to the peak of the market.

Figures compiled by property adviser CBRE show an average lot size of over EUR 50 mln when cross-border investors started looking Poland, the Czech Republic, Slovakia and Hungary in 2003. Average volumes were just below the EUR 50 mark in 2006. Since then they have dropped and stood at about EUR 30 mln over the first eight months of 2012.

The data was presented by Jos Tromp, head of CEE research and consultancy, CBRE to PropertyEU's CEE Investment Briefing in early September.

The picture is similar for South Eastern Europe, though the number of transactions is considerably lower. Average lot sizes of just above EUR 25 mln were recorded in 2003. This peaked to around EUR 50 mln in 2008 before the market collapsed and the average size went below EUR 25 mln.

Lot sizes in 2012, based on transactions up to August, are back at the 2003 level.

The trend in Russia has been different, with lot sizes increasing strongly despite a slowing in overall investment activity.

CBRE's data showed average lot sizes below EUR 25 mln in 2003, rising above EUR 75 mln. This crashed down to about EUR 40 mln in 2009. Since then volumes have been rising steeply and stand at EUR 100 mln-plus now.

Investment in Russian commercial real estate is expected to reach $4.5 bn (EUR 3.6 bn) in 2012, a drop of nearly 30% compared to the $6.4 bn recorded in 2011.

Tromp noted, however, that a lot of equity is targeting the market that there have been some very large transactions over the last two years, which has pushed up the average lot size.

The latest was 01 Properties acquiring Silver City business park in Moscow for EUR 271 mln. Last year, Kazakh firm Verny Investment bought the Ritz Carlton in Moscow for EUR 426 mln and Morgan Stanley Real Estate Investing acquired the Galeria shopping centre in St Petersburg for EUR 800 mln.