Occupier and investment sentiment remains positive across all Central and Eastern European countries tracked by the RICS Commercial Property Monitor. Results for Q2 2017 show that Hungary and the Czech Republic continue to post the strongest overall results. The vast majority of respondents expect new investors to enter the market with the presence of local and CEE investors predicted to increase across the region in the year ahead.

Investment volumes in Central and Eastern Europe (Poland, Slovakia, Hungary, Czech Republic, Russia and Turkey) reached €7 billion in H1 2017. This is 6% less than in the same period of the previous year.

Immofinanz recorded a significant increase in net profit to €105.3 million in the first half of 2017 (H1 2016: €-243.3 million). Net profit from continuing operations, i.e. excluding Russia, totalled €113.1 million (H1 2016: €-123.9 million). Rental income remained stable at €114.9 million (H1 2016: €115.9 million) despite the continuing sale of non-strategic properties. After an adjustment for new acquisitions, completions and sales (like-for-like), rental income rose by a sound 4.6% to €92.4 million. The results of asset management increased by 10.0% to €79.1 million, and financial results turned sharply positive at €104.4 million (H1 2016: €-58.0 million). This improvement resulted, above all, from positive valuation effects related to the investments in CA Immo and BUWOG.

It the first six months of 2017 GTC refinanced and concluded loans for almost €400 million through euro bonds offering, project loans and construction loans.

The industrial real estate market in Hungary hit the vacancy rate of 5.5% in the first half of 2017, which is the lowest number on record since it has been measured by the Budapest Research Forum (BRF). In total, less than 73,000 sqm space is currently vacant in the Budapest metropolitan area of the 1.95 million sqm total modern logistics area, and only four Class A buildings can offer more than 5,000 sqm contiguous warehouse space. The lack of available space is due to the strong absorption of the last few years, and at the same time there are still limited number of speculative projects in progress or have building permits, says Tamás Beck, Director of Industrial Agency at Colliers International Hungary.

In the first half of 2017 the warehouse market was unquestionably the fastest growing commercial property sector in Poland. The highest volume of industrial and warehouse space was delivered to the market around Poznań, i.e. 133,000 sqm, while the largest scheme of 161,000 sqm is currently under construction in Szczecin. The record numbers in respect of the schemes delivered to the market are not discouraging developers from commencing new projects.

The hotel market in Romania could become more diverse throughout the next year as a result of new brands entering the market by means of leasing or partnership contracts with real estate developers as an alternative to the management or franchise contracts. Such a business model will lead to the relaunch of the hotel market and will offer, at the same time, the possibility for real estate developers to diversify their portfolio, according to Colliers International. 

The Czech Republic has become the top performer of the Central European region in terms of the volume of investment that has flowed into commercial real estate since the beginning of 2017. Unlike the preceding years when Poland was the clear number one, the largest amount has been invested in the Czech Republic, even though the country’s market is roughly one half the size of its larger neighbour’s market. 

Real estate activity during the first half of 2017 was very dynamic in Bucharest as well as throughout Romania. New deliveries, extensions and transactions have led to considerable growth in the main sectors – industrial, retail, office and investment. According to Colliers International, the upward trend will continue for the remainder of the year and will be doubled by new demands.

AFI Europe Romania published its Q2 and H1 2017 financial results, generating a Net Operating Income (NOI) from its income producing assets in Romania of €12.5 million in Q2 and close to €25 million in H1, representing respectively 10.4% and 11.5% higher results compared to the same periods in 2016.