Commercial real estate market in Central Europe. See where the biggest investments are located

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Bulgaria, the Czech Republic, Romania, Slovakia, Hungary… In each of these countries, new commercial facilities have been popping up like mushrooms in recent months. However, the most impressive investments in real estate of this type, including warehouses, are to be found in Poland.

In 2017, the value of transactions on the commercial real estate market in Central and Eastern Europe broke the record, reaching for the first time in history 13 billion Euro. Specialists from the international consulting company Cushman & Wakefield emphasize that in 2017 all countries of this part of the continent recorded a similar increase compared to the previous year. Nevertheless, despite the political risk, the increase was the highest in Poland. It amounted to 9 percent from around 4.6 billion Euros to approximately 5 billion Euros, which is the best result in the last 10 years.

The investors from North America, Asia, and South Africa had the largest share in terms of market activity

A bit smaller – German and Austrian companies. The importance of national and regional capital has also been strengthened. The increase in the activity of local investors was recorded throughout the region. This applies in particular to the Czech Republic, where in 2017 the share of domestic capital in the total investment volume exceeded 37 percent with the particularly high involvement of such entities as CPI, Reico and Mint, as well as the Slovak market thanks to investments made by IAD. Among the players actively operating in Hungary, OTP Fund Management and Diófa Fund Management are worth mentioning.

In Poland, the share of domestic capital in the volume of investment transactions in relation to the size of the market is smaller, but also here, such companies as PZN (real estate management company) and PHU Poziom (construction company) have intensified their activities. Poland dominates in each of the four key parts of the commercial real estate market, and especially in the warehouse sector. The situation is much more equal, for example in relation to the retail real estate sector (a similar result was achieved by the Czech Republic). Investment in the warehouse sector in Bulgaria looks relatively weak compared to other countries.

Domination in the investment volume does not mean a high capitalization rate

In fact, in countries like Poland and the Czech Republic with the biggest investments, the capitalization rate is the lowest. In the Czech Republic, it is 4.25 percent for the commercial market, 4.6 percent for the office market and 4.6 percent for the warehouse market, with a high volume of transactions.

The last 12 months led to the signing of „power play” contracts in the Central and Eastern European region, including key players and portfolio investments, which resulted in a record volume in 2017. The growing demand in the entire region is likely to lead to an increase in investments in the first quarter of 2018 – predicts James Chapman, Partner in the Capital Markets Department of Cushman & Wakefield.”

There have been spectacular transactions in recent months, of which, as key specialists from Cushman & Wakefield, exchange, for example, the acquisition of Logicor’s warehouse portfolio by CIC (the largest transaction in the warehouse real estate sector in Poland), or the sale of eleven commercial properties in the Czech Republic, Poland , Romania and Hungary by CBRE Global Investors for approx. EUR 650 million.

Investment volume on commercial real estate markets (2017)
 Poland  5 billion euro
 The Czech Republic  3,3 billion euro
 Hungary  1,8 billion euro
 Romania  1 billion euro
 Bulagaria  876 million euro
 Slovakia  470 million euro

The year 2018 promises to be positive for the commercial real estate market

An increase in investment demand is expected due to a favorable economic outlook, an inflow of new capital from outside Europe (the inflow of more capital than hitherto is expected from both the USA and Canada, as well as South Africa and Europe).

On the Central European market, further consolidation is expected, and capitalization rates will be under pressure created by strong investment demand and limited availability of space, especially the most attractive ones. In connection with this, a further increase in net rents as well as capitalization rates is expected, especially in the office and warehouse segments.

The value of investments on the Central and Eastern European market in 2017 in the warehouse sector
 Poland  1,1 billion euro
 The Czech Republic  409 million euro
 Slovakia  289 million euro
 Hungary  243 million euro
 Romania  185 million euro
 Bulgaria  8,2 million euro


Capitalization rate at the end of 2017 in the warehouse sector
Bulgaria  7,75 percent
Romania  7,25 percent
 Slovakia  6,25 percent
 Hungary  6 percent
 Poland  5,25 percent
The Czech Republic  4,6 percent


Photo: Zalando