CBRE: Nearly 10 Billion Euros Invested in Eastern European Real Estate in 2015

Real estate markets in Central and Eastern Europe attracted foreign investments of 9.9 billion euros throughout last year, an increase of 25% compared to the previous year. More than half of the companies that placed money originate from the United States of America and Germany.

CBRE: nearly 10 billion euros were invested in Eastern European real estate in 2015Central and Eastern European countries continue to be profitable for the world’s major investors, a fact demonstrated by the continuously increasing sums placed in real estate markets: „Investments in Central and Eastern European countries (excluding Russia) grew by 25% in 2015 compared to the previous year and reached the figure of 9.9 billion euros. While the annual growth was expected, the overall performance exceeds forecasts and outlines a picture of significant easing in the region’s markets,” states the most recent CBRE report focused on this area.

The largest sums were placed by American investment funds (160 million euros), representing 30% of the total, an increase of seven percentage points compared to 2014. Specialists emphasize that the re-entry into the markets of major names such as Morgan Stanley or Goldman Sachs indicates an increase in investor confidence in the zones of this part of Europe.

Germany is the second-largest provider of foreign investors, with 23% of the total capital placed in the region (compared to 12% in the previous year). According to real estate analysts, Germany’s presence at the top is partly due to the investment activity of Union Investment, the most important German investor in the region.

„The high level of investment in 2015 impacted investment yields, pushing them to higher levels. Inter-regional differences in terms of pricing have significant potential for realignment. While certain markets and sectors have already reached yield levels recorded in peak economic cycles (especially the Czech Republic and Poland), other countries still have growth potential. Investment transactions for properties show no signs of slowing growth, and CBRE considers that, in certain national markets, yields can exceed the levels recorded in 2007,” the real estate consultancy company’s report specifies.

While forecasts for 2016 indicate a positive trend, a potential factor for diminishing the growth in investment volume could be the relatively low presence of highly attractive investment products. Office space developments in Warsaw and Bucharest are at a record level, which will lead to an increase in the interest of developers and tenants to act in these markets.

„The significant investment volumes in the region are the result of activity by American and German investors who sought to capitalize on the relatively high yield levels and significant market stocks. In 2016, we expect a continuation of investments, given that the market is prepared to record significant economic growth in Central and Eastern Europe, which has higher investment yields compared to Western Europe and where there is active interest from banks in financing investments in the region. Also, the strong expansion of retail sales reported throughout Central and Eastern Europe will maintain high investor interest. We also expect an increase in the presence of Asian investors in the region and a diversification of their profile,” concludes Gijs Klomp, Head of CEE Investment Properties.