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Real estate investment volumes in CEE look set to match 2020 levels despite the pandemic

Logistics and residential continue to record increasingly strong volumes, held back only by the shortage of available product for sale.

Despite the ongoing disruption of the pandemic, investment volumes for the first three quarters of 2021, totalling €7.3 billion, are down just 10% YoY and ca. 20% lower than the same period of 2019.  In ‘The CEE Investment Scene’ Colliers estimate that 2021 year-end volumes will reach similar levels as in 2020 of between €10.0 and €11.0 billion.
Individually, most countries are behind their pre-pandemic volumes, but Poland, with 56% of 2021 volumes, Hungary and Slovakia are up on 2020 levels. The typically strong fourth quarter for transactions may however fall short due to the lack of available product in many markets and continued travel complications for investors.

Q3 2021 Prime Yields and 12 month forecast
Kevin Turpin, Regional Director of Research, CEE explains: “We have recorded limited movements in prime yields for many markets in the region, primarily due to the ongoing lack of transactional evidence to support further shifts. The main exception, however, is prime logistics yields that have come in by almost 100 bps on average across CEE since Q1 2020, with Poland reaching over 180 bps. Our view remains that while some further inward shifts are inevitable, core and well performing assets should hold up better, with more pressure on secondary product”.  

CEE flows by sector
The office sector just about managed to hold on to the top spot with a 36% share of Q1-Q3 2021 volumes. Logistics and residential continue to record increasingly strong volumes, held back only by the shortage of available product for sale on the market. Retail volumes continue to be supported by retail park and supermarket assets, while hospitality volumes remain limited overall.

CEE flows by origin of buyer
Western and Northern European funds were behind 42% of all investment volume in the first three quarters of 2021, most notably capital came from Germany, the UK and Sweden. CEE capital was also very busy with a 30% share of total volumes. Czech domiciled capital was the most active overall with a 19% share and responsible for 53% of Czech volumes, 80% of Slovak volumes and with acquisitions also recorded in Poland, Romania, Hungary and Bulgaria. Hungarian capital also remained active, with both domestic acquisitions and others across the region, including Romania and Poland.
Economic indicators and drivers
Commenting on what lies ahead, Kevin concluded: “Economies across the region have held up relatively well. However, there are several issues that are causing a great deal of concern and debate, many of which will impact the property industry in terms of supply, demand and affordability. First of all, the ESG agenda has become and will continue to be a key factor for change and success when investing in real estate. In addition, supply chain and labour issues are causing shortages and price hikes for construction materials and essential components and goods in other industries. Residential prices are spiking, causing concern over affordability, on top of the energy crisis and other inflationary pressures. It is ultimately the consumer that will bear the cost of this or, an uncertain period of belt tightening will prevail while things settle”.  



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Tamas Steinfeld

Associate Director | Hungary

Budapest

  • He has valuation experience in various asset classes (industrial, retail, office, hotel,  development land, special purpose real estate, etc.). Besides property valuation engagements, he was also involved in business and asset valuation related projects.

  • The valuation works Tamás has done cover a variety of purposes including sale, secured lending, internal decision making and financial reporting for various clients including banks, investors, developers, owners and funds.

  • He also gained experience in advisory engagements such as: Feasibility and market studies, Highest and best use analyses; Strategy consulting (e.g. managing non-performing property portfolio owned by financial institutions, preparation of a real estate investment strategies).

  • During his work at Big4 audit/consultancy firms he has reviewed numerous property valuation reports prepared by external appraisers in order to provide an opinion, whether these valuations are suitable for financial reporting purposes.

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Bence Vecsey

Director, Head of Investment | Hungary

Budapest

Bence Vécsey joined Colliers International in 2013 as Director and Head of Investment Services and has been responsible for management and operations of the team in Hungary helping the firm to establish itself as the leading investment consultancy business in the country. Bence graduated from the Budapest University of Economics Sciences with majors in Capital Markets and Corporate Finance and was a member of RICS.

Bence’s scope of responsibilities includes structuring and execution of property sale and acqusition processes, commercial due diligence and advisory, commercial negotiation of sale and purchase contracts and supplementary transactional documentation in addition to deal coordination in order to ensure that clients’ milestones are met successfully and on time.

 

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