In 2013, investment transactions with a volume of approximately €6.2 billion have been recorded in CEE, JLL recently presented in their latest investment market summary of 2013.
This represents a circa 57 percent y-o-y increase compared to 2012 volumes (€3.9 billion). Poland remained the leading regional market with a share of ca 55 percent in the CEE, followed by the Czech Republic (22 percent), Hungary (7 percent), Slovakia (5 percent) and Romania (4 percent). Bulgaria, Croatia, Serbia and Slovenia made up the remaining 6 percent.
Troy Javaher, Head of Capital Markets, CEE, JLL, commented: “2013 posted a very robust albeit inconsistent performance across the CEE. Poland remained the primary investment destination with 55 percent of the total investment volume, hitting a post-2006 high of over €3.4 billion. The Czech Republic and Slovakia experienced a strong rebound and there is now substantive interest in selected opportunities in Hungary and Romania. We observe two dominating investment strategies: core funds targeting prime properties and willing to bid competitively to secure product, and value add funds targeting portfolio and platform deals. We also see the CEE region continuing to attract new capital.”
According to JLL, total investment volumes for 2013 amounted to over €3.4 billion, the highest since 2006. The volume of 2013 office transactions amounted to around €1.07 billion, retail – about €1.39 billion, industrial – around €656 million, mixed-use projects and multi-segment portfolio deals – about €218 million, and hotel – more than €113 million.
The largest 2013 transaction across all commercial real estate market segments was the sale of the Silesia City Center for around €400 million. The largest transactions in the office market were: sale of the New City complex in Warsaw for €127 million and CA Immo’s acquisition of Axa Immoselect ‘s remaining 49 percent stake in office portfolio, including Bitwy Warszawskiej, Saski Crescent, Saski Point, Sienna Center and Warsaw Towers. In the industrial segment, the largest transaction was the purchase of 50 percent of the SEGRO industrial platform by PSP Investments.
Agata Sekuła, Head of Retail Investment, CEE, JLL, summarized: “Poland, accounting for 55 percent of CEE total transaction volume, continues to be perceived as fundamentally stable, with good development prospects and a key destination for real estate investment in the CEE region. We assume that Poland will further consolidate its leading position in the region in 2014 and this year’s transaction volume on the Polish commercial real estate market can be close to last year’s result.”
At present JLL estimates prime office yields to remain stable at around 6.25 percent and retail yields for the best in class product at 5.75 percent. For truly prime warehouse assets, yields are expected at below 7.75 percent. Prime retail yields should remain stable but prime office and warehouse yields might see some further compression during 2014. The yield gap between prime and secondary product is 100 to 250 bps and this spread is expected to remain.
