Investment volumes in Central and Eastern Europe (CEE) are set to fall by around 30% for 2020, reaching €9.4 bn for the year, according to new data from Cushman & Wakefield.
Yet 2020 has marked another impressive year for Poland, responsible for 60% of all transactions, the data shows. Deal volumes in Poland are down by a quarter, but the country kicked off the year in record form and has proved on the whole resilient, the research firm said.
'Generally, 2020 is ending on a positive note despite renewed lockdowns as the vaccine roll-out is a promise of a more normal market in 2021,' noted Soren Rodian Olsen, partner, head of capital markets, Cushman & Wakefield.
The Polish commercial real estate market got off to a flying start to 2020, registering €1.72 bn worth of deals, which was the second best result in the first quarter of a year on record.
Investment activity slowed afterwards due to the uncertainty caused by the pandemic, but buyers adapted their strategies to the new situation, which prevented a massive drop in the total annual volume, the research suggested.
It is worth noting that 2019 was one of the three most successful years in the last decade, Cushman & Wakefield said, which makes this year’s decrease in investment activity slightly more pronounced, with Poland posting the smallest fall in the region.
Transactions in Poland were dominated by the sales of industrial properties, accounting for almost half of the total volume. More than 39% of all deals took place in the office sector.
Jeff Alson, CE partner, capital markets group, Cushman & Wakefield said: At €5.6 bn, Poland’s investment volumes are 25% down on the all-time record in 2019.
'Retail has hit a 10-year low whereas office investment activity slowed due to investors taking a more cautious approach towards large deals. Logistics ended 2020 at a record high of close to 50% of the total volume.'
Other markets
The overall volume of transactions in the Czech Republic will reach around €1.2 bn for 2020, marking a 63% decrease compared with a very successful and better-than-average 2019. In Slovakia, the Covid-19 pandemic largely suspended ongoing transactions and temporarily dampened new investment demand, which, together with growing retail and office saturation, caused a 37% year-on-year decline in transaction volume to € 429 mln.
Whilst Hungarian investment levels were down 25% year-on-year, this follows four of the five strongest years on record and is still 40% above the strongest year achieved in the 2008-2015 period.
The Romanian investment market weathered the impact of the pandemic well, with total investment volumes reaching almost €1 bn, mainly driven by office transactions. This is in line with average annual volumes over the past 3 years and suggests that the market has matured in recent years. Cushman & Wakefield said it expected the liquidity momentum to carry over into 2021, with the industrial sector becoming a major focus.
Cushman & Wakefield experts predict that while full economic impact may take 1-2 years, there is sentiment for the real estate market to bounce back more rapidly in Q2/Q3 2021. Investment focus in the office sector next year will mainly be core and value-add assets, while logistics and alternatives (PRS, data centres) will continue to be the primary focus of most investors.
