CEE market records third highest real estate investment volume on record, says Savills

Total property investment activity in Poland, the Czech Republic, Slovakia, Hungary and Romania for Q1-Q3 2020 was EUR7.6 billion, the third highest volume on record, despite the global Covid-19 pandemic, according to the latest research by Savills. 

Total investment volumes by year end are forecast to surpass EUR10 billion, which would be in line with the five-year average.
 
The figures have been boosted by a number of portfolio transactions since the beginning of the year, accounting for 44 per cent of the total investment turnover compared to 24 per cent last year. The shares were particularly high in Poland (47 per cent) and the Czech Republic (67 per cent). Some of the largest transactions of 2020 took place in these two markets, such as the EUR1.3 billion Residomo apartment portfolio in Czech Republic in Q1 and the EUR1 billion Goodman industrial portfolio across the region in Q3.
 
While offices continue to represent the largest market share at 38 per cent, logistics now accounts for 30 per cent of the total, overtaking retail at 11 per cent, according to the international real estate advisor. At EUR2.3 billion, industrial investment over the first three quarters has already surpassed last year’s total.
 
Chris Gillum, Head of Offices, Regional Investment Advisory EMEA, Savills, says: “Cross border investors have once again been the most active investors in CEE, despite the restrictions due to Covid-19. Attracted by strong yields and positive long-term fundamentals in the region, they accounted for 87 per cent of the volume transacted between Q1 and Q3 2020, above the 84 per cent five-year average.
 
“A prime example is the successful disposal of Buda Square and Margit Palace in Budapest by Hungarian fund manager Adventum who, advised by Savills and local associate Eston International, sold the two office assets to UK-based Resolution Property together with Chinese conglomerate Fosun International. The gradual convergence of buyer and seller expectations should lead to more transactions, and this will likely be concentrated in the core segment of the market.”
 
Eri Mitsostergiou, Director, European Research, Savills, adds: “This year will be driven by a rise in investment in logistics assets and core offices in CEE. The residential sector is also becoming more established although restricted by lack of product, while retail transactions will be focused on convenience and food retailing.
 
“According to the latest Oxford Economics forecasts the five countries we monitor are likely to contract by -5.4 per cent, compared to a -7.4 per cent contraction across the EU. Despite the downward revisions, we anticipate the CEE capital cities to outperform their European counterparts in terms of GDP growth, with Warsaw at the top of the list of cities that are expected to weather the coronavirus storm best.”

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