Total real estate investment volumes in Central and Eastern Europe (CEE) shrank by an annual 64% to €2.02 billion, in the first half of 2023, in line with downward European and global trends, Colliers revealed in its latest “CEE Investment Scene Q1 2023” report.
“Volumes for Q2 and H1 2023 across CEE were some of the lowest levels on record” Kevin Turpin, Regional Director of Capital Markets, CEE, commented. Bulgaria was the only market in the region to record a year-on-year increase (196%), while the other markets all had drops in volumes of between 42% and 87%. However, Bulgaria was 7% lower compared to the same time period in 2021.
Office investment volumes have declined significantly, both globally and in CEE, accounting for just 29.5% % of CEE volumes in H1 2023, similar to that of the I&L sector. Retail was back on top with a 35% share of activity at the end of half year period, and included the only transaction over €100 million in Q2, a shopping centre in Pardubice, Czech Republic.
CEE-6 (Bulgaria, Czechia, Hungary, Poland, Romania, Slovakia) domestic capital has been the most active so far in 2023, with an impressive 59% share of total regional volumes. In particular, Czech capital (40%) secured the highest volume and almost 17% in just 2 transactions (both Retail).
Given the current conditions, particularly in relation to the cost of debt, predicting market activity for the remainder of 2023 remains challenging, but the commercial real estate agency forecasts it could reach or exceed €5 billion at the current rate of development, although it cautioned that activity predictions are complicated due to the rising cost of debt.
“The lack of transactional evidence in the market is dragging out the period of price discovery and a meaningful recovery will depend greatly on an improved inflationary and interest rate environment,” Colliers said.