Central & Eastern Europe Sees Increase In Commercial Real Estate Platform Deals And Corporate Activity
According to the latest research from CBRE, Central and Eastern European commercial real estate investors are increasingly moving away from the traditional, single-asset transactions. A trend that started in 2014, and continued in the first four months of 2015, is the significant increase in the amount of platform deals and corporate activity via OPCO / PROPCO structures in the CEE region.
“The key driver of this move is the abundance of equity in the market invested via, in particular, private equity houses willing to go big, quickly. Platform acquisitions and corporate takeovers provide the opportunity to succeed on this strategy and are possibly less competitively priced than traditional single assets and / or smaller portfolios in the market.”
CBRE’s research shows that although interest in CEE commercial real estate is still high, scarcity of available product in certain markets, particularly Poland, is putting some constraints on the amount of investment activity. This lack of stock, however, is resulting in more deal flow into other parts of the region, particularly in the Czech Republic which has seen investment volumes from January to April this year increase to €901 million, compared to €326 million for the same period in 2014. Hungary has also benefitted with €174 million of commercial real estate investment in the first four months of this year (Jan-April 2014: €54 million) and, to a lesser extent the Baltics and Romania.
“Commercial real estate investors continue to look for opportunities in Central and Eastern Europe, with an increasing amount of countries in the region benefitting. We believe that this will continue throughout the year as international capital continues its search for return on investment and expands its reach further afield than western and southern Europe. However, actual volumes from year to year may fluctuate as deals tend to be ‘chunky’, for example the Palladium Shopping Centre in the Czech Republic sold for c. €570 million, representing 63% of the country’s total volume. Overall, we believe we will see a further recovery of volumes, in most parts of CEE, on the back of low interest rates and improving economic fundamentals”.