According to Savills latest research, total property investment activity in Poland, the Czech Republic, Slovakia, Hungary and Romania for Q1-Q3 2020 was €7.6 billion, the third-highest volume on record, despite the global COVID-19 pandemic. Total investment volumes by year-end are forecast to surpass €10 billion, which would be in line with the five-year average.
The figures have been boosted by a number of portfolio transactions since the beginning of the year, accounting for 44% of the total investment turnover compared to 24% last year. The shares were particularly high in Poland (47%) and the Czech Republic (67%). Some of the largest transactions of 2020 took place in these two markets, such as the €1.3 billion Residomo apartment portfolio in the Czech Republic in Q1 and the €1 billion Goodman industrial portfolio across the region in Q3.
While offices continue to represent the largest market share at 38%, logistics now accounts for 30% of the total, overtaking retail at 11%, according to the international real estate advisor. At €2.3 billion, industrial investment over the first three quarters has already surpassed last year’s total.
“Cross border investors have once again been the most active investors in CEE, despite the restrictions due to COVID-19. Attracted by strong yields and positive long-term fundamentals in the region, they accounted for 87% of the volume transacted between Q1 and Q3 2020, above the 84% five-year average. A prime example is the successful disposal of Buda Square and Margit Palace in Budapest by Hungarian fund manager Adventum who, advised by Savills and local associate Eston International, sold the two office assets to UK-based Resolution Property together with Chinese conglomerate Fosun International. The gradual convergence of buyer and seller expectations should lead to more transactions, and this will likely be concentrated in the core segment of the market,” Chris Gillum, Head of Offices, Regional Investment Advisory EMEA at Savills says.
“With more than 50% of total investment volume of ca. €7.6 billion in Q1-Q3 2020 in CEE countries we monitor, this was Poland that attracted the majority of the capital into CRE sectors. The Czech Republic was the second-largest market with almost 30% of the transactions in value terms. The activity of CEE investors in Poland continued in the first three quarters of this year (e.g. acquisition of majority stake in GTC by Hungarian Optimum) and we expect it will remain noticeable also in the next ones. We observe increasing interest in the alternative sectors such as PRS, student housing and data centres which will likely continue next year,” Marek Paczuski, Director, Deputy Head of Investment at Savills Poland comments.
"This year will be driven by a rise in investment in logistics assets and core offices in CEE. The residential sector is also becoming more established although restricted by lack of product, while retail transactions will be focused on convenience and food retailing. According to the latest Oxford Economics forecasts the five countries we monitor are likely to contract by -5.4%, compared to a -7.4% contraction across the EU. Despite the downward revisions, we anticipate the CEE capital cities to outperform their European counterparts in terms of GDP growth, with Warsaw at the top of the list of cities that are expected to weather the coronavirus storm best,” Eri Mitsostergiou, Director, European Research at Savills adds.
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