The real estate investment market in Central Europe experienced a major reversal in 2008 as the global financial crisis transformed into an economic slowdown. Cushman & Wakefield reported that total investment volume for the region declined to just EUR 3 bn, 50% of the average recorded over recent years. The broker's research covers the four countries of the Visegrad Group: Poland, Hungary, The Czech Republic and Slovakia.
The real estate investment market in Central Europe experienced a major reversal in 2008 as the global financial crisis transformed into an economic slowdown. Cushman & Wakefield reported that total investment volume for the region declined to just EUR 3 bn, 50% of the average recorded over recent years. The broker's research covers the four countries of the Visegrad Group: Poland, Hungary, The Czech Republic and Slovakia.
Poland was the best performer, with EUR 1.75 bn transacted, accounting for more than half the total investment volume for the region. In comparison with previous years the transaction volume was 42% lower than in 2007 and 66% lower than in 2006. 'However, the investment volume is still better than in 2004,' C&W said.
The real estate investment market in Hungary collapsed to EUR 407 mln in 2008. C&W said this was in stark contrast to the record level achieved in 2007 of EUR 1.9 bn. Volumes in Slovakia tumbled to EUR 119 mln, 60% less than the total in 2007.
In the Czech Republic, total investment volume came to around EUR 850 mln in the three main commercial sectors (office, retail and industrial) during 2008. The decrease in investment volume was approximately 63% year-on-year. Nearly 90% of the total investment volume was completed prior to the collapse of Lehman Brothers and the subsequent withdrawal of many German open-ended funds in the final quarter.
Across the region investors favoured the office sector, with an increase in market share from 43% to 64% between 2007 and 2008 whilst the retail market share fell back from 48% to 23% over the same period. Charles Taylor, head of Capital Markets at C&W in Budapest forecasts a moderate flow of capital back into property investment in Central Europe during 2009.
'The re-pricing of property across the region is accelerating and as soon as owners accept the reality of the market, some attractive buying opportunities will open up for prime assets and sites that have been hard to source in recent years,' he said.
'Economic conditions are obviously set to be tougher than the region has become used to, but Central Europe as a whole is still expected to out-perform the West. As a result we anticipate an improving appetite for investment in the region later this year, once credit availability improves and as soon as risk tolerances start to increase once more.'
