by Property Forum | Report

Total investments in commercial real estate in Slovakia in 2021 exceeded €750 million which exceeded the volume of investments in the pre-crisis year 2019. Prime yields decreased over the past year, confirming the attractiveness of investing in the commercial real estate market in Slovakia, says Cushman & Wakefield.


The total volume of commercial real estate transactions in Slovakia reached €552 million in the first half of 2021, thanks to nine closed transactions, thus surpassing the whole of 2020, which, despite the outbreak of the coronavirus pandemic, benefited from negotiations that started in 2019. In the second half of 2021, €223 million was invested with a lower average transaction size. In total, C&W recorded 21 transactions in 2021, which is five more than in the previous year.

The increased interest in the retail real estate segment, which investors used to avoid during the beginning of the pandemic, is evident this year, mainly due to increased investor caution due to uncertainty about the impact of the pandemic on its future development. In the first half of the year, a 60% ownership share of the premium shopping centre Aupark Bratislava with a total leasable area of ​​59,600 square meters was acquired by the investment group WOOD & Company and its joint venture partner Tatra Asset Management. This acquisition is one of the largest transactions in the Slovak commercial real estate market in history and confirms confidence in the future development of the real estate market and shopping centres in Slovakia. Other retail transactions included the sale of the Tesco Senec hypermarket, the Danubia Petržalka shopping centre or the OBI big box portfolio transaction. In total, up to €330 million were invested in retail, which is the most of all sectors. For comparison, in 2019 and 2020, the volume of investments in retail reached approximately €150 million.

The pandemic has brought an increased appetite for retail assets with fewer tenants and longer lease terms, which provide investors with a more stable income in the event of economic fluctuations. These include, in particular, retail parks and stand-alone retail units, where prime yield is gradually declining due to high demand for these assets. At the end of 2021, it reached 7% with the potential for further reduction. Shopping centres continue to maintain a prime yield of 6% and our outlook for this year is stable, but most of the projects are waiting for their revenue to stabilize before they are offered for sale.

The industrial real estate sector continues to expand and enjoys the greatest interest of foreign investors among all segments of the real estate market. The total amount of investments in industrial real estate was €289 million, which is the most in the history of the Slovak real estate market. The largest transaction was the sale of the Accentis Námestovo industrial park with the main tenant Yanfeng, in favour of one of the largest industrial developers on the Slovak market, CTP. The developer also bought the Immopark Žilina industrial park. International investors were also behind the purchase of buildings from the Arete Invest portfolio, the Karimpol Senec industrial warehouse or DSK Logistik in Kostolné Kračany. Investments take the form of individual as well as portfolio acquisitions.

The broad presence of international investors in the sector provides exceptional liquidity, which, combined with the low perceived risk of these assets, is pushing for a further decline in the achievable prime yield. Prime yield for logistics properties has fallen to 5.25% with a positive outlook for this year. Due to the significant growth of online sales and the consequent increased demand for warehousing and distribution close to the customer, there was a localized growth in rents in the city logistics segment. The growth of rents in other parts of the country is tamed by the wide availability of land for future construction at various stages of permits, as well as by the growing concentration of competition in industrial hubs. The speed of construction of distribution centres in the range of 6 to 12 months and the availability of land in the hands of experienced developers allows a flexible response to market needs and at the same time reduces the pressure on the growth of rents.

The total volume of investments in the office sector reached €105 million in 2021, despite the smaller number of projects available for sale. The activity increased at the end of the year, when several properties came on the market, the possible successful transactions of which will be completed only this year. However, newly built, fully leased office buildings with contracts concluded for more than 7 years with strong tenants continue to attract institutional investors at an achievable yield below 5.25%, which is 0.50 percentage points lower than in the same period last year.

The most significant office transaction of the year was the acquisition of the Zuckermandel office project by the real estate fund Erste Realitná Renta of the management company Asset Management Slovenská sporiteľňa from the Slovak developer JTRE. The transaction confirmed the optimistic price development of first-class office real estate. As another significant transaction, we record the sale of the Bratislava Business Center 1 and 1 Plus projects to the WOOD & Company investment fund from CA Immo, which terminated its operations on the Slovak market through the sale. Office transactions did not take place only in the capital, as the Košice office-retail project Cassovar Business Center I was acquired by the InTeFi group from the Czech Republic.

Investment in hotels and mixed-use projects has reached its highest level in recent years, totalling €51 million. The acquisition of the Mercure Bratislava Centrum Hotel by the CPI Property Group is a manifestation of the continuing investment interest in hotels in Central and Eastern Europe, despite the significant impact of the pandemic on this market segment.

"The year 2021 confirmed the attractiveness of the Slovak commercial real estate market for both domestic and foreign investors. The growth of the capital strength of domestic and regional investors, especially real estate funds managed by local management companies, gives the market the necessary liquidity. At the same time, it is clear that the uncertainty caused by COVID in 2020 was fully accepted as part of the risk, without any impact on yields,” says Marián Fridrich, Head of Cushman & Wakefield Slovakia.

Marián Fridrich

Marián Fridrich

Head of Slovakia
Cushman & Wakefield

Marián Fridrich is a real estate professional and currently Head of Slovakia at Cushman & Wakefield responsible for for the overall business development of the firm and development and management of the Capital Markets Group in Slovakia. Previously Marián was Head of Transactions at IAD responsible for investment, divestment and debt financing activities for real estate funds managed by IAD and its subsidiary active across all CEE countries. Before joining IAD, Marián held a position of Senior Real Estate Lending Manager for Tatra Banka (a member of Raiffeisen group) structuring senior and mezzanine deals for various investment and development projects. His career started in Cushman Wakefield´s Prague office as a retail consultant, later helping to open Cushman´s Slovak office in 2008. During his professional life, Marián has concluded various deal structures transacting over €500 million in debt and commercial properties. Marián is Member of the Royal Institution of Chartered Surveyors (MRICS) since 2017. More »

"In 2021, we did not record a decline in property values ​​in any of the mentioned segments. On the contrary, the value of industrial real estate continued to grow solidly, followed by an increase in the value of office real estate due to a lack of alternative opportunities and a persistent surplus of free capital in the hands of real estate funds. We see an increase in yields in 2022 as unlikely due to the ongoing availability of capital on the market,” says Tomáš Némethy, Head of Valuation and Advisory Services at Cushman & Wakefield Slovakia.