The total volume of investments in commercial real estate in the Baltics amounted to €1.38 billion in 2015, exceeding the total record level achieved in 2007 and showing a significant increase over the previous year’s €855 million. This investment volume includes commercial properties with sales prices over €0.4 million, excluding development and land acquisitions.
Estonia leads in terms of the volume of investments in commercial real estate with €544 million, followed by Lithuania with €444 million and Latvia with €394 million. The Baltic investment market continued to remain active throughout the year.
In Latvia and Lithuania, a major part of investments made in 2015 involved retail properties, generating more than half of the total transaction volume – 77 percent in Latvia and 50 percent in Lithuania, whereas in Estonia, investment activity was dominated by retail and office segments, each attracting 29 percent of the total volume.
Investment activity in the Baltic states in 2015 was driven by several portfolio and large single property deals, such as the sale of the BPT Optima fund portfolio of 7 objects in the Baltics for €163 million to a new international investor Partners Group, the sale of a portfolio of municipal rental apartments in Tallinn to LCN Capital Partners for €100+ million, the acquisition of Radisson Blu Sky hotel in Tallinn by EfTEN Capital, the acquisition by Hili Properties of a portfolio consisting of nine retail objects across Latvia and the sale of the Molas and Europa shopping centres in Vilnius. Apart from that, 60 percent of investment volume in Latvia was driven by the acquisition of the Alfa, Mols and Dole shopping centres by the world’s leading alternative asset management company – Blackstone, as a part of the acquisition of ten Nordic real estate funds managed by Obligo Investment Management. In addition to the purchase of the BPT Optima fund portfolio, Partners Group acquired the Solaris shopping and entertainment centre in Tallinn as part of a large Sveafastigheter property portfolio.
Average transaction size across the market as a whole was €4.6 million in 2015 (compared with €3.1 million in 2014). The increase in average transaction size can be attributed to the large number and volume of deals above the €20 million threshold in 2015 (approx. 59 percent of the total volume). At the same time, approx. 79 percent of the total number of transactions in 2015 in the Baltic states were deals of less than €3 million.
2015 saw some change in the investor profile as in addition to the funds and asset managers with fund origins mainly from Baltic and Nordic countries, as well as Russia, new investors from Western Europe have appeared and new groups of local investors have formed in all three Baltic states as well.
Colliers’ experts forecast a similar volume of investments in the Baltic States in 2016. Moreover, new professional investors from other regions will continue to appear on the Baltic commercial real estate market.