by Property Forum | Report

Slovakia’s commercial real estate market is expected to reach an all-time high in its investment activity this year, according to a market research conducted by Colliers International.


Following a record investment performance in 2016, the number of transactions closed in H1 2017 has fallen. Despite the trend, experts are forecasting that the sum of investment transactions at the end of 2017 will be much higher than the long-term average of €290m per annum between 2009 and 2015. The estimate is based on the expected number of transactions at the end of the year, favourable macroeconomic conditions and availability of competitively priced quality stock.
 
Most of the 2017 transactions were attributed to the sector of industrial and logistic buildings followed by offices. The largest investment transaction in the first quarter of 2017 involved the sale of Lozorno logistics park with the total area of 118,000 sqm. The transaction took place between CPI property group and White Star Institutional investor, whose market share in Slovak industrial Class A thus increased to 6 %.
 
“Slovakia’s commercial real estate market remains attractive for both local and institutional investors despite the fact that the supply does not reach the levels of the neighbouring markets,” says Ermanno Boeris, Managing Director at Colliers International Slovakia.
 
Office real estate market
 
In H1 2017 the total stock of office buildings for rent increased by approximately 69,000 sqm with the completion of Phase I of the project Blumental, blocks B and CA of Zuckermandel, the building UNIQ at Staromestská ulica in Bratislava, and Panorama Busniess Center II. As a result, the vacancy rate of office buildings in H1 2017 fell to 6.77 %.
 
The total stock of modern office buildings in Bratislava exceeded 1.7 million sqm. H2 2017 is expected to bring another 40,000 sqm of office space. There are currently approximately 234,000 sqm of office premises under active construction.
 
The majority of this segment’s transactions were pre-leases. The office real estate market in Bratislava is dominated by professional services, IT, pharmaceutical and medical sector.
 
Industrial real estate market
 
The development of Slovakia’s industrial and logistic real estate is positive. The majority of industrial and logistic spaces are still concentrated in the capital of Bratislava and the western part of the country. There are several projects planned for Eastern Slovakia as well. Speculative development aims at the regions of Senec, Nové Mesto nad Váhom and Žilina.
 
The market remains favourable for developers, since the high degree of competition is pushing rents down despite the low vacancy rate fluctuating around 2.2 %.
 
Retail real estate market
 
The retail real estate market continues to be one of the most attractive sectors. The retail stock demand is driven by the growing GDP, historically low levels of unemployment and rising real wages.
 
In H1 2017 the total retail stock in Slovakia amounted to around 1.66 million sqm. Traditional shopping centres made up 71 % of the total stock whereas 29 % were represented by specialized shopping centres (retail parks and big box retail). More than 180,000 sqm of retail area are under active construction, which will manifest in a higher number of shopping centres in the foreseeable future.
 
Retail space (sqm) / 1000 inhabitants. Source: Colliers International

 

Despite the fact that Bratislava is the most saturated with retail areas, even more than the average of major European cities, more projects will appear in the next few years. These include an extension of the shopping centres Eurovea and Aupark as well as a new building of the Mlynské Nivy bus station. A retail park in the new residential area Slnečnice is also under construction.