CEE Commercial Real Estate investment volume up 11% year-on-year

- According to preliminary data from CBRE -
Warsaw, 17 October 2014 – Central and Eastern European (excluding Russia) commercial real estate investment volumes have risen 11% year-on-year according to CBRE’s latest report.

Poland’s real estate market continues to attract strong investment, with €1,8 billion invested in the 9 months to end of September 2014. However, limited availability of product in prime commercial real estate in Poland means investors are now looking more closely at The Czech Republic, Romania and Hungary, which have seen increases of 11%, 215% and 126% respectively. Investment into Russian commercial real estate has dropped significantly, down 45% in the nine months to the end of September 2014, due in no small part to socio and political issues.

European CRE investment totalled €133 billion compared to €105 billion for the first three quarters of 2013, an uplift of 27%. The core markets of UK and Germany continue to show strong growth, with both countries recording increases of over 20%. The performance of Irish and Spanish CRE investment markets was particularly impressive in Q3 2014. CRE investment activity in other “recovery” markets was also strong in Q3 2014, with the Netherlands (35%), Italy (40%) and Portugal (54%) all recording significant year-on-year increases. Investors are increasingly willing to move up the risk curve and to look beyond just the “core” markets.

Commenting on the preliminary results, Mike Atwell, head of CBRE CEE Capital Markets, said:

“We have seen continued strong interest in commercial real estate across the region, apart from in Russia. This has been driven by low interest rates and increased allocation towards the asset class. Based on the deal pipeline we have seen, we believe the last quarter of the year will be strong. We also see no signs of a slowdown in activity and anticipate a continued increase in investment volumes for 2015.”

Joanna Mroczek, Director of Consultancy & Research at CBRE, added:
“Poland has the most dynamic real estate market amongst all CEE countries. When analyzing data from the 3rd quarter of 2014 we can see increased activity in the office and industrial segments of the market. Both segments recorded boosted interest from investors and grew by 20% Y-o-Y. Almost 60% of transactions, which were signed in Q3 took place in Warsaw. We have observed a number of new American investors entering our market. Based on the deal pipeline, we expect the total volume of transactions to exceed the last year level.”

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