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Falling investment volumes in Central Europe
( 26 / February / 2009 )
In line with the global economic slow-down, the real estate investment market in Central Europe has experienced a strong fall back in 2008. The total investment volume for the region in 2008 shrunk to just € 3 billion, 50 % of normal trading volumes according to Cushman & Wakefield.
Total investment volume was around € 850 million in the three main commercial sectors (office, retail and industrial) in the Czech Republic during 2008. The decrease in investment volume was approximately 63 % year on year. Nearly 90 % of the total investment volume was completed prior to the collapse of Lehman Brothers and the withdrawal of many German open-ended funds in September.
Almost 58 % of the investment volume was generated by the office market. Retail and industrial sectors delivered 25 p%, and 17 % of the investment market respectively. Over 60 % of the investments were transacted by German domiciled investment funds.
“New types of property investors are to appear in the Czech Republic during 2009. Opportunity funds will be the dominant buyers this year as more risk-adverse investors stick to mature markets as they value safety much more than potential return,“ predicts James Chapman, Partner and Head of Capital Markets Group at Cushman & Wakefield in Prague.
The dramatic reduction in activity is expected to continue through the first half of the year, as investors continue to monitor a combination of economic indicators, pricing adjustments and the lending market. The speed of a recovery will be heavily dependent upon how quickly the property industry adapts to the fundamental change in pricing that has occurred, as well as the return of property financing on commercially acceptable terms.
Cushman & Wakefield