According to experts of Cushman & Wakefield, this year’s total volume of transactions is expected to reach €9.4 billion in Central Europe, which will represent a one-third decrease on last year’s figure. Poland’s share in the total transaction volume - albeit down by one-fourth compared with last year - will hit approximately 60%.
“Generally, 2020 is ending on a positive note despite renewed lockdowns as the vaccine roll-out is a promise of a more normal market in 2021,” says Soren Rodian Olsen, Partner, Head of Capital Markets, Cushman & Wakefield.
The Polish commercial real estate market got off to a flying start to 2020, with €1.72 billion worth of deals, which was the second-best result in the first quarter of a year on record. Investment activity slowed afterwards due to the uncertainty caused by the pandemic, but buyers adapted their strategies to the new situation, which prevented a massive drop in the total annual volume. It is worth noting that 2019 was one of the three most successful years in the last decade, which makes this year’s decrease in investment activity slightly more pronounced, with Poland posting the smallest fall in the region.
Transactions in Poland were dominated by the sales of industrial properties, accounting for almost half of the total volume. More than 39% of all deals took place in the office sector.
“At €5.6 billion, Poland’s investment volumes are 25% down on the all-time record in 2019. Retail has hit a 10-year low whereas office investment activity slowed due to investors taking a more cautious approach towards large deals. Logistics ended 2020 at a record high of close to 50% of the total volume,” comments Jeff Alson, CE Partner, Capital Markets Group, Cushman & Wakefield.
Other markets
CZECH REPUBLIC
The overall volume of transactions in the Czech Republic will reach approx. €1.2 bn this year, which means a 63% decrease compared with very successful and better-than-average 2019.
SLOVAKIA
In 2020, the COVID-19 pandemic suspended ongoing transactions and temporarily dampened new investment demand, which, together with growing retail and office saturation, caused a 37% year-on-year decline in transaction volume to €429 million.
HUNGARY
Whilst Hungarian investment levels were down 25% year-on-year, this follows four of the five strongest years on record and is still 40% above the strongest year achieved in the 2008-2015 period.
ROMANIA
The Romanian investment market weathered the impact of the pandemic well, with total investment volumes reaching almost €1 billion, mainly driven by office transactions. This is in line with average annual volumes over the past 3 years and suggests that the market has matured in recent years. We expect the liquidity momentum to carry over into 2021, with the industrial sector becoming a major focus.
Market forecasts
Cushman & Wakefield experts predict that while full economic impact may take 1-2 years, there is sentiment for the real estate market to bounce back more rapidly in Q2/Q3 2021. Investment focus in the office sector next year will mainly be core and value-add assets, while logistics and alternatives (PRS, data centers) will continue to be the primary focus of most investors.
“Some investors will not look beyond major gateway locations despite higher prices but an increasing number of funds are seeking opportunity in a broader range of markets, including CEE. Core yields are likely to compress in 2021 but only in leading markets and for 100% core product,” comments Soren Rodian Olsen, Partner, Head of Capital Markets, Cushman & Wakefield.
Belief in the future of offices is stronger than in Q2/Q3 2020, which is positive, but general leasing trends for 2021 remain an area of uncertainty.
