CEE Joins Rest of Europe in Real Estate Investment Decline

Europe is responsible for bringing about a second wave of the worst financial crisis in the history of man (thanks Europe), so it is unsurprising that commercial property in Europe is suffering...

Europe is responsible for bringing about a second wave of the worst financial crisis in the history of man (thanks Europe), so it is unsurprising that commercial property in Europe is suffering. However, during the past 2 years of this suffering we have had one beacon hope in the form of Central and Eastern Europe (or the CEE region as it is so called) while European property has been in a state of near constant decline, the CEE property markets consistently outperformed.

But as the saying goes, all good things come to an end, and now the chunk of rapidly emerging Europe found to the centre-east of the continent is beginning to feel the pinch of continued uncertainty caused by the sovereign debt crisis to its west.

According to the latest data from CB Richard Ellis commercial property investment volumes in Central and Eastern Europe (CEE) were 60% lower year-on-year in 1H 2012.

In fact, now the only real beacons of hope in the region are Poland and Russia; according to the report 83% of the 2.1 billion Euros transacted in the first six months of this year were in these 2 countries. Romania was a prime example of the overall trend; just 50 million Euros worth of commercial real estate investment was transacted in 1H 2012, compared to 250 million Euros in the first half of last year.

Jos Tromp, Head of CEE Research & Consultancy of CBRE said, "Continuing Eurozone uncertainty combined with an almost pure investor focus on core product has caused market activity to contract in a similar way to that seen in 2009/2010. With the issues in the Eurozone unlikely to be resolved soon, the negative spin-off this turbulence has on banks is therefore likely to prevail for longer. A consequence for real estate markets will be that the available amount of capital to be invested in real estate across CEE will remain lower than the market has previously been used to."

- Friday 13 July 2012

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