Investors returned to the Central and Eastern Europe (CEE) markets. Their activity exceeded the volume of €3.3billion in H1 2024 translating into 41% growth year on year and reaching almost the full-year volume of 2023. JLL experts, in cooperation with iO Partners, present an analysis of the trends observed in the investment market in Poland against the background of countries in the CEE region.
- Large transactions return to the Polish market. The first examples of increased investor activity were already seen in H1, with further large-scale deals being on the horizon. The investment volume of Q2, fuelled by substantial portfolio acquisitions, has recorded the best quarterly result since Q4 2022.
- In the Czech Republic, the total investment volume in H1 2024 reached approx. €859 million. During this period, we observed international capital flowing into the Czech Republic, accounting for about 11% of the total investment volume.
- The first half of 2024 saw a significant downturn in investment activity in Hungary, with volumes reaching just €140 million, marking a roughly 35% decline compared to the same period in 2023. This slowdown was primarily due to the absence of income-producing office transactions for the first time.
- In Romania, the property investment volume in H1 2024 was approx.€417million, more than double the value registered in H12023. Local (Romanian) investors were only responsible for 26% of the investment volume.
- In Slovakia, investment volumes in H1 reached approx. €120 million, a noticeable decrease from the previous year’s figures. The industrial and logistics sectors dominated, while the office and retail sectors showed subdued activity due to heightened transactions in prior years and the living sector emerging as a vital asset class. A few sizeable transactions might close in H2.
“Throughout 2024, the CEE investment market shows signs of resilience and adaptability. Our recent report with JLL reveals a 41% increase in H1 2024, reflecting a growing interest in local assets. While some sectors face challenges, the overall outlook is cautiously optimistic, driven by improved liquidity and a more supportive monetary policy environment. We anticipate that the second half of the year will offer further opportunities for growth and value creation in the CEE region,” says Charles Boudet, CEO of iO Partners.
Poland’s Commercial Real Estate: Stabilization Ahead
Investment turnover in H1 in Poland totalled almost €1.7 billion, up 91% on H1 2023. The lion’s share of these investments was represented by two large portfolio transactions, including a sale of a 49% common equity stake in Vulcanion, owned by CPI Property Group, for €250 million to funds managed by Sona Asset Management. The portfolio’s gross asset value is about €1 billion. The second milestone transaction was an acquisition of four shopping centres and two hypermarkets held by Cromwell by Star Capital Finance for €285 million. The second quarter also witnessed an interesting reshuffling between sectors in the investment structure. Offices were responsible for almost half of the turnover, followed by the retail segment with around 30% share. Industrial investments represented 17% of total turnover, while Hotel and Living sectors generated about 3% each. Moreover, H1’s number of transactions in the office and retail sectors has already exceeded the full-year result of 2023.
“The first half of 2024 reflects a rising number of investors, which may indicate that we are getting very close to the end of the downturn cycle. We observe a considerable easing of macroeconomic challenges, with declining inflation expectations across all key European markets, including Poland. Additionally, there is an increasing sense of confidence emerging as both physical and financial real estate metrics appear to be stabilizing. Another positive sign is the interest rate cut cycle initiated by the ECB in June. This first-rate cut in a long time gives the green light for further cuts, bringing the prospect of more acceptable financing costs closer to investors,” says Dmytro Havrylenko, Head of Capital Markets, JLL.
