Nery Alaev

Central Europe still a strong centre for investment

Nery Alaev writes about investment in Central Europe.

Nery Alaev

Warsaw, Poland

A new report from major consulting firm Cushman & Wakefield has pointed towards Central Europe as a strong hub for real estate investment despite a slight year-on-year decrease in investment.

Investment activity in the core markets of Poland, the Czech Republic, Slovakia, Hungary and Romania continued in the first quarter of 2016, with €1.4bn invested according to Europe Real Estate.

The slight decrease in transaction volume of 5% compared to the same period in 2015 was smaller than the 14% fall recorded overall in Europe. Activity in Q1 was also slightly above the long-run average of €1.2bn since 2007.

Poland Leading

At the front of the queue for investment is Poland, according to the report.

In the country, investment exceeded €500m in Q1 2016, a rise of 17% on the same period in 2015. Of the total 44 transactions recorded in the entire central region in Q1 2016, half took place in Poland.

Commenting on the region as a whole, James Chapman of Cushman & Wakefield said:

 “Any thoughts of a market slowdown have so far proved unfounded. Investors are showing their confidence in the region’s economic performance over and above political changes. We can already see Q2 activity likely to outstrip 2015 volumes with further growth set for the second half of the year.”

Types of assets

Offices were the dominant asset class across the region in regards to investment volumes.

A hefty €621m was traded in Q1 2016 (an increase of over 200% year-on-year), this was followed by retail at €574m.

Retail investors mainly focused on shopping centres, as well as super- and hypermarkets. The industrial sector also saw a year-on-year decline in investment overall.

In summary, it’s clear that real estate markets in Central Europe are still performing strongly – I’ve discussed Poland’s strength before – it may be that the time is now for investment in these countries.

Nery Alaev

Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.