Real estate volumes for Central and Eastern Europe (CEE) have started to decline from the high of EUR 11.2 bn in 2011 due to a lack of bank financing and product availability, according to Jos Tromp, head of CEE research and consulting at CBRE.
Tromp noted that preliminary data suggested about EUR 800 mln of transactions were recorded in CEE during the first quarter of this year, compared to more than EUR 2.5 bn in the first quarter of last year. A volume of more than EUR 3 bn for the last three months of 2011, which was slightly down on the volumes for Q3.
'CEE as a whole posted the third strongest result in history in 2011 but we are getting to a turning point,' Tromp said in his key note presentation to PropertyEU's Investment Briefing on the CEE recently. The event was hosted in London by CBRE.
One of the main reasons for the declining transaction activity, Tromp said, is the lack of financing. 'The lack of financing is starting to effect certain markets. In Hungary, for instance, there is hardly any financing around. There is more financing in other markets but it is getting more restrictive.'
The second issue is a lack of availability of the core assets investors are looking for. 'A lot of the better quality stock has been already been sold,' Tromp said.
In terms of investment locations, most of the money is flowing into Poland, the Czech Republic, Hungary and Slovakia in Central Europe. Tromp said Central Europe accounts for 80-100% of the total CEE volume with hardly any money is going into South Eastern Europe at the moment.
Poland is the most liquid market as it accounted for about 50% of the total volume in 2011. Warsaw attracted 60-70% of investment in the office segment.
Read more on the CEE Investment Briefing in the April edition of PropertyEU Magazine. Click on the link below to subscribe