Year end volumes for 2022 in Central and Eastern Europe could surpass €12 bn but uncertainty around the war in Ukraine and economic headwinds, could impact this prediction, reveals a report by Colliers: CEE Investment Scene Q1 2022.
‘Individually, some countries are still behind their pre pandemic volumes. However, Poland has increased by 23% YoY (year-on-year) and has secured a 56% share of Q1 2022 volumes. After a slow start last year, the Czech Republic had a good first quarter in 2022. Signs are mixed for the remainder of the year, with a number of challenges, but also opportunities ahead,’ explained Kevin Turpin, regional director of Capital Markets, CEE at Colliers.
Yield forecast
The region has recorded few movements in prime yields for most markets in the region, partially due to the ongoing lack of transactional evidence to support further shifts. Turpin: ‘Our current outlook also suggests there will be limited, or no further compression in the short term. Particularly as we expect the cost of debt and other financial instruments to increase, adding pressure on margins. The combined impacts of the pandemic and war in Ukraine are driving inflationary pressures and negative economic sentiment.’
Industrial and logistics lost its leading spot to Offices and Retail in Q1 2022, as the lack of available product became more apparent. Retail volumes were up considerably thanks to EPP’s divestment of 49% and 50% shares in two of its retail portfolios, EPP & M1 respectively, for well over €650 mln.
CEE flows by origin of buyer
US capital made a big impact on investment volumes in Q1 2022 with over €1 bn (38%) in five transactions, the biggest of which was Google’s acquisition of The Warsaw Hub for circa. €585 mln. Other notable transactions included the acquisition of retail portfolios from EPP, by Group from South Africa and Pimco from the United States, for a combined volume of over €650 mln. Otherwise, it was CEE domiciled capital that remained highly active with €972 mln (34%) in 31 transactions.
