The Czech Republic accounted for more than half of the €1.4 bn of real estate investment in Central and Eastern Europe (CEE) during the first three months of 2015.

The Czech Republic accounted for more than half of the €1.4 bn of real estate investment in Central and Eastern Europe (CEE) during the first three months of 2015.

The Czech Q1 volume came to €731 mln, compared to €458 mln for Poland, traditionally the largest investment market in the region, according to the latest figures published by JLL. Romania saw €140 mln of property trade hands during Q1.

The overall regional performance was relatively subdued: the total of €1.44 bn for Q1 2015 was on a par with the volume for the same period the year before.

Cushman & Wakefield, which also released Q1 figures for CEE, reported an investment volume of €800 mln for the Czech Republic and a broadly similar volume to JLL of €1.3 bn for the CEE region as a whole. The divergent Czech figures reflect differences on what constituted the biggest deal in the review period.

Czech cash in
The largest transaction in the Czech market and the CEE region in Q1 as Union Investment’s acquisition of a majority share in the Palladium shopping centre in Prague. The investment amounted to €570 mln, which the property adviser described as the 'the largest-ever property transaction' in the Czech Republic.

The second-largest Czech investment deal was AEW Europe acquiring a 255,000 m2 logistics park in Prague from Panattoni Europe for €150 mln.

In Poland JLL puts the volume at €458 mln, while Cushman & Wakefield is slightly lower on €430 mln, which it said was down by 52% year-on-year.

The largest single asset transaction was Griffin Real Estate’s acquisition of Green Horizon in Lodz for €65 mln.

Another significant deal was new entrant, Rockcastle, buying a regional shopping centre in Opole. The Mauritius and Johannesburg-listed real state investor purchased the 18,000 m2 Solaris Centre (Galeria Handlowa) for €52 mln, reflecting an initial yield of 7.7%.

Other Polish deals included US investment house Hines acquiring the 4,800 m2 Sky Office Center office building in Warsaw and Polish fund Octava Fizan buying the 9,600 m2 Obrzezna Building in Warsaw and the 11,300 m2 Baltic Business Center in Gdynia. The investment volumes for these deals were not disclosed.

2015 outlook
JLL is upbeat about the prospects for the rest of the year. Troy Javaher, head of capital markets CEE, said: 'It appears that 2015 will be another robust year for the investment market. According to our initial estimates, at the end of Q1 2015 the volume of concluded transactions reached €1.44 bn.

'What is also worth noting is that after Q1 the Czech Republic is the leading investment market in the Central and Eastern European region and is ahead of Poland. Our conservative forecasts for the year show that the total volume of sales and acquisitions will be comparable, if not higher, than that of the very impressive results seen in 2014.'

Good market conditions as well as investor interest in real estate located in the CEE region is visibly reflected in the number of on-going negotiations, he added

The Czech market, according to JLL, will be a major driving force. JLL has an active mandate volume across CEE & SEE of over €5.4 bn, all at various stages of progress. JLL's capital market teams in the Czech Republic and Poland currently account for €2.2 bn and €2 bn in ongoing transactions respectively.

In its analysis, Cushman & Wakefield said retail was the leading sector in Central Europe with €762 mln traded in Q1 2015 (a 66% increase year-on-year).

'We anticipate that 2015 investment volumes will reach €7.5 bn. There is a significant pipeline of transactions ahead for this year with Q1 recording only 18% of the forecast volume. Commercial real estate investment volumes in the core CE countries are forecast to reach over €10 bn during the next 5 years. Poland will account for almost half of this activity, the Czech Republic making up 25% and Hungary, Romania and Slovakia taking the remainder', added James Chapman, head of capital markets in Central Europe for Cushman & Wakefield.

See the May edition of PropertyEU Magazine for more on investment activity in Europe in Q1 2015.