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According to the CEE Investment Market Overview in H1 2012 published by Jones Lang LaSalle
Warsaw, 26 July 2012 - The Central and Eastern European real estate market has seen an approximate 40% drop in volumes transacted compared to the same period in 2011. For H1 2012 Jones Lang LaSalle has recorded a regional investment volume of €1.26 billion. Poland remains the most active market with close to 70% of the total regional transaction volume. Activity in H1 2012 in the Czech Republic reached approximately €225 million, in Romania €92 million and in Hungary €71 million. Slovakia, Croatia and Serbia have not yet registered any transactional activity.
H1 2012 recorded €877 million of transactions across all sectors in Poland. It represents a marginal drop of 6% over the corresponding period of 2011. At the same time it confirmed that despite a general market slow-down, investor sentiment for Poland continues to be very positive. Total assets transacted included over €283 million in offices, almost €460 million in retail, and ca. €113 million in the industrial sector.
The number of H1 2012 deals were a result of postponed 2011 closings and almost none of the most significant transactions were both initiated and closed within the first 6 months’ period. Transactions in general are now taking longer to close. The largest transaction closed in H1 2012 was the sale of the 77% stake in the mixed-use retail and office scheme Złote Tarasy in Warsaw. It was sold by ING Real Estate to a consortium of Unibail-Rodamco and CBRE PFCE for a reported price of €475 million. Other significant transactions in the retail sector included Galeria Tęcza in the regional city of Kalisz (traded by Rank Progress to Blackstone for approximately €37 million) and Alfa Centrum in another regional city – Olsztyn – sold by Arka Fund to Rockspring at a price of approximately €84 million.
The office sector has seen a total of 6 deals with the largest being Harmony Office Center II in Warsaw’s Mokotow District, sold by Polish developer Eko Park to Spanish investor – Azora – for the price of approximately €54 million. The second biggest deal was concluded between Spanish fund – Falcon Investments (arm of CBREI) – who sold the Renaissance Building in Warsaw to GLL Partners at the price rumoured to be at the level of €27 million.One interesting observation is that industrial investment transactions (with deals such as the Prologis portfolio acquired by Hines at just below €100 million and the Ideal Idea deal closing at sub €10 million) have already almost outpaced the entire 2011 results (just below €116 million). With other transactions under preliminary agreements and/or in due diligence, it is expected that the entire 2012 industrial investment volume may significantly exceed the record 2007 results (just above €318 million).
Tomasz Trzósło, Head of Capital Markets CEE, Jones Lang LaSalle comments on the key findings from the report and future trends: “We believe that the overall investment sentiment and outlook for Poland will continue to be good and, that the total investment volume in 2012 may reach between €2 and 2.5 billion, compared to a total of €2.75 billion in the very strong 2011. At the mid-year point we estimate prime office yields to be at 6.25%, retail yields at 5.75% and warehouse yields at around 8.0%. We forecast prime yields to remain stable in the short term but, this will highly depend on how the situation in the Eurozone and the banking sector evolves over the coming months. The yield gap between prime and secondary product is 100 to 200 bps and we expect this spread to continue”.
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