CEE property investment almost triples

CEE real estate investment in Q1 2011 is almost three times higher year on year, with prospects bright for more deals in 2011

novým majitelem administrativní budovy Keystone se stane německý fond GLL. foto: © KeystoneČeská pozice

novým majitelem administrativní budovy Keystone se stane německý fond GLL.

Investment deals in Central and Eastern Europe real estate totaled approximately €1.85 billion in Q1 2011, according to a report by property consultants Jones Lang LaSalle. The transactions were spread across the office (over 40 percent), retail (28 percent) and industrial (26 percent) sectors and almost tripled the first quarter investment totals from 2010.

Czech property investment accounted for €465 million of the total and came through three transactions — the VGP logistics portfolio, Keystone and CA Immo’s take-over of Europolis.

“We have seen increased buying opportunities across all sectors, and this is set to continue with a number of investors now having decided that this is the right time to sell,” said George Lewis, head of capital market at Jones Lang LaSalle in Prague, in a press release.

In 2010 total investment on the Czech market reached €800 million, which was 40 percent higher than 2009. According to Lewis, this year’s total is expected to rise even further. “There are a number of major assets in the Czech Republic which have and will be brought to the market in 2011, and we predict transaction volumes will comfortably exceed €1 billion in 2011.”  

The same trend holds true for the region as a whole, where the 2010 CEE investment total of €3 billion could be bested by a considerable amount, reaching up to €4.5 billion for the year overall. This is due to transactions that were held over from 2010 as well as owners deciding to bring properties on the market this year.

The rise is further expected to produce compression in prime yields throughout the year, as well as a growing gap between prime and secondary yields, as the secondary market continues to remain stagnant.