News

CEE real estate investment volumes hit impressive €9 billion in 2015

Poland leads the CEE region with €4.1 billion of finalized investment transactions, followed by the Czech Republic with €2.65 billion.

As core European markets continue to become increasingly tight, the CEE[1] region is attracting more capital and witnessing high levels of real estate investment activity.

Stuart Jordan, Head of Capital Markets CEE at JLL, said: “With almost €9 billion in real estate transactions, 2015 represented the third highest CEE regional investment volume on record. Whilst Poland and Czech Republic attracted 76% of regional volume, 2015 saw growth and continued interest also in Hungary, Romania and Slovakia. Further to this, the SEE region is showing strong signs of attracting new equity sources to the region, with Serbia leading the way in terms of large institutional grade transactions. Investor appetite is set to continue and considering the ongoing deals and those in the pipeline, we expect 2016 to be another good year for Central and Eastern Europe markets”.

A full -year breakdown saw Poland lead the region in terms of real estate investment volumes with €4.1 billion, a 2015 share of 46%. The Czech Republic came next (30%, a total of €2.65 billion) followed by Hungary (9%, €790 million), Romania (7.5%, €650 million), Slovakia (4.5%, €412 million), and the SEE (other CEE) markets (3%, ca €300 million).

CEE Investment Volumes 2012 – 2015

Source: JLL, 2015 (preliminary data)

Czech Republic: the best year since 2007

For the Czech Republic, the last year´s volume is the highest since 2007 when a total of €2.87 billion was recorded. After a strong first half, H2 2015 saw a further €1.45 billion of transactions to provide a full-year figure of €2.65 billion. H2 was therefore 65% higher than the comparable 2014 figure. Overall, volumes were ca. 8% below the 2007 country record.

25 transactions in H2 provided an average deal size above €58 million, with traditional sector activity focused on offices (12) and retail (7). Notably, the largest transaction of the period was the sale of a residential portfolio by a private Czech group and whilst residential is not a developed institutional investment asset class in the Czech Republic, the profile of the RPG portfolio saw Blackstone / Round Hill Capital complete its purchase in August for ca. €700 million.

“During 2015, domestic equity further cemented its position within the well-diversified Czech capital pool; H2 saw 62% of offices and 50% of retail purchased by Czech entities,” says Stuart Jordan. Of particular note was the purchase of ‘Savarin’, a retail-led, mixed-use project by Czech group Crestyl from Ballymore for ca. €84 million; this redevelopment opportunity’s realisation will constitute a major regeneration of an area behind Wenceslas Square (Prague’s main high street) and sparked a competitive tender involving an array of international and domestic groups.

Elsewhere, retail transactions demonstrated the continued appetite for regional assets. Varyáda shopping centre in Karlovy Vary and the Bluehouse Portfolio both traded to push total H2 retail volumes up to €322 million. Offices in H2 saw an increase of ca. 74% by volume when compared with H1 as the number of individual transactions doubled to 12. Industrial and logistics saw its largest transaction of 2015 in H2 with the €75 million purchase of the Amazon facility near Prague airport by AEW.

“Looking forward, a sizable pipeline across all sectors complimented by a supportive financial environment suggests that 2016 will continue the pattern of robust transactional volumes from a variety of capital sources,” concludes Stuart Jordan.