According to the latest data from CBRE, Poland and Russia are two commercial property hopes in a very bleak Europe. The report shows overall commercial real estate investment volumes fell 35% in the CEE region last year, with investment totalling just 7.4 billion Euros. Even in Poland and Russia volumes were about 20% lower than 2011.
According to the report the void between prime assets in key locations and the rest of a country is widening, with quality assets in Warsaw, Moscow and Prague attracting investor attention while the rest of the CEE region grind to a near standstill in terms of investor demand.
The report highlighted offices with 44% of the total volume as the most liquid segment, but only because of low supply levels of quality retail assets. The industrial segment also got a mention because volumes are increasing which shows increasing interest in the sector.
Jos Tromp, Head of CEE Research & Consultancy, CBRE, commented:
"Due to high levels of vacancy and relatively low net absorption in recent years, investment in the office segment in Prague has remained low. Prime assets are in demand, however, and are proving difficult to obtain. The purchase of City Green Court by Deka from Skanska for around €54 million confirmed the prime yield levels quoted for Prague. In Warsaw more offices were traded during 2012; however, investors have also started to price in the risk of vacancy increasing over the next 12-18 months."
Mike Atwell, Head of CEE Capital Markets, CBRE, commented:
"With the pricing of prime office assets relatively stable in most segments and markets, thus far pricing for secondary offices – even in the most liquid cities – has moved by at least 75-100 basis points to date. Some investors have started to show interest for value-add opportunities in prime office locations in order to pro-actively prepare for the anticipated increasing vacancy. The yield gap between prime offices in the capital and regional cities amounts to around 150 bps. Generally the gap between prime and secondary is expected to increase through to the end of 2013."
- Wednesday 09 January 2013