Europe investment slows

Recorded property investment turnover in Central and Eastern Europe slowed further in the first quarter of this year with volumes now at levels seen earlier in the decade, according to analysts...

Levels were at approximately £196 million, a third of the volume transacted in the last quarter of 2008, according to the latest report from CB Richard Ellis. But there is optimism with several project in the pipeline, it also reports.

Lack of liquidity is having an impact on every property investment market in CEE and is therefore profoundly affecting transaction numbers, it says.

The majority of all CEE investment activity in the first three months of 2009 was in Russia and the Czech Republic. Russia's volume was driven by several office transactions and one hotel transaction.

But lack of transparency is making it difficult to measure the markets. There is evidence to suggest that the more challenging conditions in Eastern Europe are impacting market transparency, making it more difficult to measure investment volumes accurately, the report says.

In the Czech Republic, investment figures were largely driven by Deka's purchase of Jungmannova Plaza office building in Prague. This was the most prominent institutional transaction closed in CEE.

Meanwhile, countries that have been drivers of CEE investment volume in recent years such as Poland and Romania recorded very low property investment volume in the first quarter.

But looking ahead there is optimism in the markets. 'What some of the low CEE investment volumes do not show is the considerable pipeline activity in some of the core markets in Central Europe. Several high quality assets are currently on the radar of institutional investors in the region, especially in the Czech Republic and Poland,' said Jos Tromp, Head of CEE Research & Consulting.

'In the remainder of 2009 the trading of a limited number of good quality schemes is expected to result in an upward trend in investment volumes in CEE,' he added.

But fewer foreign investors are on the lookout. Until now, foreign purchasers have driven investments in property in CEE, usually accounting for more than 80 per cent of all volume. But uncertainty about pricing and an inability to obtain financing have now forced many foreign buyers to the sidelines, the report concludes.

Source: www.propertywire.com