CEE Investment volumes for the Q1-Q3 2020 period have reached ca. €8.0 billion and are 12% down compared to the same period of 2019. Poland attracted €4 billion which represents 50% of all volumes in this period. Average transaction sizes are up 31.5% and the number of transactions is down 32% according to Colliers International. Despite investor appetite remaining strong for CEE, year-end volumes are likely to reach €10-11 billion, ca. 20% lower than in 2019.
Little movement in prime yields
Since Q2 2020 Colliers has recorded very little movement in prime yields, primarily due to the lack of transactional evidence to support further shifts. Colliers’ view remains that while some shifts are inevitable, core, well-performing assets should hold up well, with more pressure expected on secondary products. Due to the shift in interest of investors to logistics, we can also expect to see prices react accordingly.
Domination of the office sector
The office sector again dominated in the first 3 quarters of 2020. Understandably, retail and hotels are down considerably on last year, with logistics significantly up and greater volumes held back only by the shortage of supply.
Western European funds and the CEE domestic investors in acquisition mode
Western European funds have been most active during the first 9 months of 2020, although volumes were supported by Sweden’s Heimstaden Investing into a €1.3 billion residential portfolio in the Czech Republic.
CEE domestic investors, consisting of mainly Czech and Hungarian capital, have also remained in acquisition mode, investing both in their own markets and cross-border within CEE. Capital from Asia, particularly Singaporean and South Korean, has continued to secure opportunities in the region.
Economies to rebound in 2021
Globally and in CEE, economies are expected to take a hit in 2020 but rebound rapidly from 2021 onwards. Unemployment rates are also expected to increase, and the combination will put downward pressure on retail sales.
