'Windows of opportunity open up in Eastern Europe'

Europa Capital is set to make a comeback in Eastern Europe after an absence of nearly two years. Tim Norman, fund manager of the Europa Emerging Europe Fund I, told PropertyEU in an interview that the company has an active pipeline of deals of over EUR 100 mln in its key markets of Romania, Bulgaria, Turkey and the Western Balkans.

'Eastern Europe is about six to nine months behind Western Europe so we now feel that we have a window of opportunity we want to exploit,' Norman said, adding that the company will be able to take advantage of a scarcity of investors in the market. 'We are looking at two office projects in central Bucharest and Sofia where there is a lack of supply at present,' he added.

The vehicle, which raised EUR 164 mln of equity three years ago, is mainly targeting warehousing, retail warehousing and residential. 'We are also following the distressed markets', Norman said. In March 2008, the fund made its first acquisition in Ukraine with the purchase of Logistic Park East I, a 23,856 m² warehouse in Kiev, for $25 mln from Ukrainian developer Aladdin Group.

Although values are forecast to stabilise soon in Eastern Europe, Norman believes that in some sectors the region will never come back to the peak price levels seen in 2007. 'There is generally a high watermark just before an emerging market experiences its first recession,' he said. 'After that, market volatility tends to decrease and those prices are never achieved again'.

As a result, Europa Capital and a number of other funds have started to take Central and Eastern Europe into account within their pan-European funds' investment strategy, Norman said. Europa Capital also has a further EUR 600 mln of equity available for investment through its Europe-wide Europa Fund III, which raised EUR 730 mln in 2008.