Investment volume in commercial real estate property in the Baltic states reached EUR 1.19 billion in 2016

After the record-breaking year of 2015, high investment activity in the Baltic real estate market continued throughout 2016, resulting in total investment volume of EUR 1.19 billion. This investment volume includes commercial properties with sales prices over EUR 0.4 million, excluding development and land acquisitions.

Lithuania was the leader with an investment volume of EUR 430 million, followed by Estonia with EUR 420 million and Latvia with EUR 341 million. Even though total investment volume was ca one fifth less than in record-breaking 2015, the number of closed transactions did not significantly differ from them previous year, standing only 5 per cent lower.

Investment activity in 2016 was driven by several large single deals and portfolio sales, including the sale of the Geneba portfolio and the DSV logistics centres portfolio, the acquisition of Riga Plaza and Domina Shopping Centre in Riga and the sale of four shopping centres in Tallinn, purchase of the Kesko Senukai Logistics Centre in Kaunas and the sales of Hilton hotel in Tallinn. 

Dynamics of Investment Volume in the Baltic States


Source: Colliers International

The retail sector continued to dominate the investment horizon with 53 per cent of investment volume in Latvia, down from 77 per cent in 2015. Although in 2016 all asset classes remained in the focus of interest in Estonia, the office segment attracted the biggest share of investment - 38 per cent, up from 29 per cent in 2015. During 2016 investors in Lithuania shifted focus to the industrial segment. Consequently, the share of investments dedicated to industrial properties reached 39 per cent of total investment volume in Lithuania, compared to 18 per cent last year.Average transaction size across the market as a whole was EUR 4.0 million in 2016 (compared with EUR 4.7 million in 2015). Ca 61 per cent of total volume in 2016 consisted of deals above the EUR 10 million threshold. At the same time, approx. 77 per cent of the total number of transactions in 2016 in the Baltic States were deals of less than EUR 3 million. 

Investment Deals in the Baltic States of over EUR 30 million in 2016

Object

City

Type

Total area, sqm

Vendor

Investor

Riga Plaza SC

Riga

Retail

34 150

Diksna

Lone Star Funds

Geneba portfolio

Baltic

Office

84 000

Geneba

Laurus (NCH and Partners Group)

Domina Shopping Centre

Riga

Retail

111 000*

KanAm Grund Group

EfTEN Capital

Kesko Senukai LC

Kaunas

Industrial

67 500

Baltic Retail Properties

CPA:17 – Global

Hilton Hotel

Tallinn

Hotel

23 450

Olympic Entertainment Group

East Capital

Vesse retail park

Tallinn

Retail

23 800

Partners Group

East Captial

EU House

Tallinn

Office

12 300

Norber Grupp

Lords LB

* office and parking area included in GBA

Source: Colliers International

Mostly the same players continued to dominate the investment market in Estonia and Latvia in 2016. Nordic capital was responsible for almost one third of acquisitions in Estonia, while foreign capital in total was behind more than 65 per cent of invested volume. The share of TOP3 investors – East Capital, EfTEN Capital, Northern Horizon – amounted to almost half of the investment volume in Estonia in 2016. The Latvian market continues to be dominated by local investors (incl. local Baltic investors); Baltic and domestic spend in Latvia was responsible for more than half of acquisitions (53 per cent) in 2016. Among existing market players, EfTEN Capital, New Hanza Capital and New Horizon Capital were the most active, with 24 per cent of total annual investment volume generated by their acquisitions. The Lithuanian market continued to gain confidence among local investors as well as international investment funds. Although Baltic and Nordic investors maintained a dominant hold of the market, one of the biggest investment transactions was implemented by the American fund CPA:17 – Global managed by W.P. Carey Inc.

Colliers' experts forecast a similar volume of investments in the Baltic States in 2017. Moreover, new professional investors from other regions will continue to appear on the Baltic commercial real estate market.

For the market news in office, industrial, retail and hotel segments in the Baltic states, please read our Real Estate Market Overview.