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Investors Target Central European Property

Investors Target Central European Property


Investment activity in Central European commercial property reached €958 million in the first quarter of 2012, a six percent increase over the five year average, but down from €1.8 billion in the previous quarter, according to a new study.

The Czech market reported an upward trend with six closed transactions in the first quarter worth €237 million, compared to a mere €20 million during the same quarter in 2012, Cushman & Wakefield reports. Hungary also saw an uptick, posting €159 million in transactions in the first quarter.

But the increase in activity was not universal, Cushman & Wakefield reports. In Poland volumes declined in the first quarter to €465 million, compared to €818 million in the first quarter of 2012 and €618 million in first quarter of 2011.

A joint venture between Norges and ProLogis for distribution space accounted for 50 percent of the industrial sector investment in Central Europe in 2012.

Although overall investments are lower than the previous quarter's, activity suggests volumes will match the numbers in 2012, the firm said.  
 
"Some investors are considering taking more risk and reviewing the more developed and relatively mature parts of CE and finding not just a yield advantage and better relative economic growth than in the west, but also an improving level of liquidity," Cushman & Wakefield partner Charles Taylor commented.

The Central European office space market is leading investor interest with investments of €646 million for the first quarter of 2013.  Significant office transactions include the purchase of New City in Warsaw by Hines, Skanska's Green Towers in Wroclaw by PZU and the Andel Park B purchase in Prague by GLL. 

Central Europe is tracking the international trend. As economies around the world start recovering, an increase in demand for office space can be seen in various markets, including major metropolitan areas in the U.S. and countries in Latin America.  

Retail investment in the region was at its lowest since 2009 with Poland reporting the only large retail transaction for the first quarter. The Poland market reported investments of E465, a decrease from E818 million during the same period in 2012.

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