JLL has summarised the investment sales and acquisitions closed in Q1 2014 on the commercial real estate market across Central and Eastern Europe. Poland leads the region, accounting for 69 percent of CEE’s total transaction volume.
In Q1, investment transactions of around €1.37 billion were recorded in the CEE. This represents a circa 19 percent increase compared to Q1 2013 volumes (ca. €1.15 billion). Poland remained the dominant regional market with 69 percent share (ca. €940 million) of the CEE’s total volume, followed by the Czech Republic (16 percent), Slovakia (5 percent), Hungary (4 percent) and Romania (1 percent), with Bulgaria, Croatia, Serbia and Slovenia making up the remaining over 5 percent. Similarly to previous years, majority of transactions finalized in Q1 were still initiated last year.
Troy Javaher, Head of Capital Markets, CEE, JLL, commented: “Poland remains the leading CEE investment destination in Q1, followed by the Czech Republic. However, we are seeing substantive progress regarding deals in Slovakia, Hungary and Romania. Looking ahead, we will witness increased momentum relating to cross border portfolio and platform opportunities. This activity of scale supports the view that CEE investment volumes for 2014 are on track to match or even exceed the impressive 2013 levels.”
According to JLL, sales and acquisitions in the office segment accounted for 56 percent of the total investment volume in the CEE, followed by retail (29 percent), industrial (9 percent) and hotels (6 percent).
The first quarter’s largest CEE commercial real estate transaction was BlackRock’s sale of Warsaw’s prestigious office building – Rondo I – to Deutsche Asset & Wealth Management for ca. €300 million. The retail sector was dominated by the sale of Poznań City Center by Trigranit, Europa Capital and PKP (Polish Railways) to the consortium of Resolution Fund and ECE Fund for an undisclosed amount. The largest transaction in the industrial segment in Q1 was the sale of Panattoni Park Wrocław and Panattoni Park Błonie I from Standard Life Investments to Hillwood.
It is worth noting that the largest transactions across Central and Eastern Europe in Q1 2014 were registered in Poland.
Agata Sekuła, Head of Retail Investment, Central Europe, JLL, said: “19 percent y-o-y increase in the sales/acquisitions volume registered in Q1 2014 across CEE was possible because of the very strong opening to the year on the investment market in Poland. Taking into account ongoing transactions and the fact that Poland continues to attract foreign investors, we expect 2014’s total investment volume on the Polish commercial real estate market to be on a par with or even higher than the result in 2013. In the office market, we may witness more transactions of prime schemes in Warsaw and other major markets. As for the retail segment, investors will not only look for various products located in Poland’s major regional cities but also further a field in the country’s smaller towns and cities. In the industrial sector, investors’ attention will still be drawn to A Class facilities in major logistics locations, secured with long-term lease contracts”.
According to JLL, prime office yields in Poland have slightly compressed over the last 6 months and oscillate around 6.00 – 6.25 percent, whereas retail yields for a ‘best in class’ product remain stable at 5.75 percent. For prime warehouse assets, yields also witnessed a slight compression and now stand at 7.25 percent – 7.50 percent.
