CEE Commerical Property Investment Activity in April Beats Q1 2009 Monthly Average

Rising yields making CEE markets more attractive to potential investors...

Property investment turnover in Central & Eastern Europe (CEE) totaled approximately €100 million in April through a total of five transactions, according to CB Richard Ellis’ CEE Property Investment MarketView for April 2009 While this means that property investment remained low in April compared to previous years, it was about 32% higher than the monthly average for the first quarter of 2009. April’s transactions included three retail transactions along with one office and one industrial transaction. Jos Tromp, Head of CEE Research & Consulting, explains: “The core Central European markets of the Czech Republic and Poland accounted for four of the five April investment transactions and remain the most active CEE markets not only in terms of transactions closed, but also in terms of investor
interest.”

Overall, April’s market performance confirms that the CEE property investment market remains slow and reflects the market’s reliance on investment by the German Open-ended Funds. The most active investor in CEE so far in 2009 has been DEKA with its acquisitions of Jungmannova Plaza in
Prague and Grzybowska Park in Warsaw.

CEE markets have become more attractive to potential investors as yields have moved out across the region in recent quarters. Moreover, yields in certain Western European markets such as London, Paris and Madrid seem to be close to bottoming out, which could herald more stable yields for prime
properties in CEE later this year. Tromp comments: “While further outward movement of yields from Q1 2009 levels is expected across CEE, a foundation is being laid on which property values in CEE can build.”

In the meantime, opportunistic buyers continue to express interest in the region, but this is not yet being realised in transaction levels as prices have not moved out to the extent deemed appropriate by investors. According to Pavel Schanka, Director CEE Capital Markets: “Equity rich investors are
in a unique position in that they have limited competition and the opportunity to purchase top-flight buildings with strong income-generating potential that would not have come onto the market in normal circumstances.

Now that yields have risen rapidly and rents are nearing sustainable levels in certain markets, CEE capital values are much more stable than they were a year ago.”

source : CB Richard Ellis