CEE Real Estate Investment Volumes Q1 2024
FIGURES | CEE REAL ESTATE INVESTMENT | Q1 2024
Investment activity in Q1 2024 increased by 3% compared to the previous quarter and dropped by 11% compared to the same period last year. Czech Republic (30%), Poland (21%), Lithuania (14%), and Romania (11%) attracted the majority of investor liquidity, accounting for 76%. Estonia, Latvia, Serbia, Lithuania, and Croatia had notable positive changes compared Q1 2023. Romania and Hungary saw a slight increase of 34% and 18%. Only Estonia, Czech Republic, Lithuania, and Serbia showed improvement compared to the previous quarter.
In Q1 2024, the majority of capital came from investors in the CEE region, accounting for 74% of the total. This share remained consistent compared to the same period last year. Investors from Belgium, USA, Sweden, Italy, and Switzerland were the primary contributors from outside the region.
The average transaction size in CEE decreased from EUR 24 million in Q4 2023 to EUR 19 million in Q1 2024. This decline was primarily due to a limited number of transactions exceeding EUR 100 million. This quarter was characterized by investors displaying cautious interest, as over half of the total number of transactions were below EUR 10 million.
1.7B EUR transacted during Q1 2024 in CEE region
€ 1.7B
TTM € 6.6B
Foreign Capital
Domestic Capital
-11%
YoY Change Q1
-43%
YoY Change TTM
90
345 TTM
Nr. of Transactions
Note: YoY: Year-on-Year TTM: Trailing Twelve Months
Investment by Sector
Investment by Market
Retail
€ 646M
TTM: € 1.7B
Hotels
€ 273M
TTM: € 871M
Office
€ 464M
TTM: € 2.2B
Industrial
€ 265M
TTM: € 1.3B
Living
€ 65M
TTM: € 315M
Other
€ 5M
TTM: € 125M
Healtcare
€
TTM: € 17M
-37%
YoY Change TTM
147%
YoY Change TTM
-52%
YoY Change TTM
-58%
YoY Change TTM
-33%
YoY Change TTM
-56%
YoY Change TTM
-78%
YoY Change TTM
Baltics
€ 428M
TTM: € 908M
Poland
€ 364M
TTM: € 1.7B
Czech R.
€ 524M
TTM: € 1.3B
Slovakia
€ 3M
TTM: € 486M
Hungary
€ 85M
TTM: € 454M
Romania
€ 182M
TTM: € 546M
SEE
€ 134M
TTM: € 1.1B
Investment Volumes (annual by sector)
Office
Retail
Industrial
Hotels
Living
Other
Healthcare
Retail dominated the total volume of investor spending with a significant share of 38%. Within retail, shopping center properties accounted for 58%, followed by retail parks at 26%, and high street locations attracting 11%. Office sector claimed 27% and continuing the trend from previous quarters, hotel transactions maintained a share of 16% of the total investment volume. The industrial and logistics sector closely followed with a share of 15%.
Following a year of consistent yield decompression in 2023, theoretical repricing has continued in a more moderate manner across the region this year. Yield changes in Q1 range from 15-25 bps and occurred in several markets across major asset classes. Following these moves, prime office and industrial yields shifted to 5.60% and 5.15%, respectively in CEE (both in Czech Republic), but pricing for retail and industrial in Romania, industrial in Poland and offices in Hungary has also softened. Hotels make an exception with stable yield profile and even slight yield compression in SEE markets – backed by solid investors’ interest in this segment, lowest prime yields in CEE were quoted at 6.20% in Czech Republic.
Based on ongoing transactions, we observe generally more activity across the markets; however, this improvement in sentiment still remains to be seen in volumes. Assuming the general expectation proves to be correct, and ECB starts cutting rates in H2, we expect more activity to translate into actual closed volumes in Q4 this year. Pipelines are building up and cash is available to be deployed; however, purchasers are left with little or no evidence to back up their pricing strategy. On the vendor side, refinancing and debt maturity is less an issue in CEE than in some WE markets with higher leverages. Banks are in general busy with refinancing and there is little evidence to indicate that liquidation or fire sales might trigger the volume in CEE.
Yield expectations soften in the absence of benchmark transactions
Contacts
Head of Investment Properties CEE & Poland +48 225 448 086 sean.doyle@cbre.com
Sean Doyle
Head of Research CEE & Hungary +36 1 374 3040 gabor.borbely@cbre.com
Gábor Borbély MRICS
Head of Research Romania +40 213 131 020 daniela.gavril@cbre.com
Daniela Gavril
Head of Research Czech Republic +420 221711056 jana.prokopcova@cbre.com
Jana Prokopcová
Head of Research Czech Republic +420 221711056 jana.prokopcova@cbre.com
Jana Jovanović
© Copyright 2024. All rights reserved. This report has been prepared in good faith, based on CBRE’s current anecdotal and evidence based views of the commercial real estate market. Although CBRE believes its views reflect market conditions on the date of this presentation, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE’s control. In addition, many of CBRE’s views are opinion and/or projections based on CBRE’s subjective analyses of current market circumstances. Other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE’s current views to later be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change
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Figures by Country
Hungary
Poland
Slovakia
Czech Republic
Romania
Croatia
Bulgaria
Baltics
Slovenia
Serbia
Click to read
SEE
Note: 2024 annual numbers account till 31/03/24