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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 €220 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% 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.

via Property investment continues to slow in Central and East Europe | Europe | News.

CB Richard Ellis today announced the results of its Rent and Yield Indices for the first quarter of 2009, broadly reporting falling rents and rising yields across Europe. Key findings included:

Rents

– Offices: Prime office rents across Europe fell in the first quarter of 2009. The CB Richard Ellis office rent index for the EU-15 area fell by 3.4% in the quarter, taking the year-on-year rate of growth to minus 4.1%. Twenty eight of the 48 locations in the survey saw prime rent falls, one location increased and 19 remained unchanged. The largest falls occurred in Kyiv (down 33% to €357 per m² per annum) and Moscow (down 20% to €918 per m² per annum). The only increase was in Zagreb, where rents increased by 0.8% to €211 per sq m per annum.

– Retail: Prime rents also fell in the retail sector. The CB Richard Ellis retail rent index for the EU-15 area fell by 1.3% in the quarter, taking the year-on-year rate of growth to 0.6% Only one location in the survey saw an increase in the level of prime rent, 13 declined and 29 remained unchanged. The largest falls were recorded in Warsaw (down 33% to €960 per sq m per annum) and Bucharest (down 30% to €1,080 per m² per annum). The single increase occurred in Birmingham, where rents increased by 9% to €1,669 per m² per annum.

– Industrial: Industrial rents also fell in the quarter. The CB Richard Ellis industrial rent index for the EU-15 area fell by 2.2% in the quarter, taking the year-on-year rate of growth to -4.6% Twenty four of the 43 locations in the survey saw the level of prime rent remaining stable, 18 declined and only one location saw an increase. The largest falls were in Dubai (down 33% to €67 per m² per annum) and Kyiv (down 22% to €64 per m² per annum). The single increase occurred in The Hague, where rents increased by 8.3% to €65 per m² per annum.

Yields

– Offices: Office yields across Europe rose in the first quarter. The CB Richard Ellis office yield index for the EU-15 area rose by 19 basis points in the quarter, and as a result is 107 basis points higher than a year ago. Thirty four of the 49 locations in the survey saw upward yield movements, two saw yields move lower and 13 remained unchanged. The largest rise occurred in Moscow with yields moving 150 basis points higher to 11.5%, with Sofia, Zagreb, Budapest, Bucharest and Belgrade each seeing increases of 100 basis points. Running counter to the general upward trend, there were yield reductions of 15 basis points in Manchester and Birmingham taking both to 7.5%.

– Retail: Retail yields also rose in the quarter. The CB Richard Ellis retail yield index for the EU-15 area rose by 24 basis points in the quarter, and as a result is 98 basis points higher than it was a year ago. Thirty of the 42 locations in the survey saw upward yield movements, 12 remained unchanged and there were no reductions. The largest rises occurred in Bucharest (300 basis points) and Moscow (150 basis points), leaving both at 11.5%.

– Industrial: Industrial yields also rose. The CB Richard Ellis industrial yield index for the EU-15 area rose by 32 basis points in the quarter, and as a result is 120 basis points higher than a year ago. Thirty two of the 41 locations in the survey saw upward yield movements, none saw yield reductions and nine remained unchanged. As in the retail sector, the largest rises (150 basis points) occurred in Moscow and Bucharest, taking them to 13.5% and 10% respectively.

Commenting on these changes, Richard Holberton, Director, EMEA Research said: “The effects of the general deterioration in short-term economic prospects are very evident in the downward pressure on all the sector rent indices this quarter. This weakening in the rental outlook, along with loss of liquidity and higher risk premia, continues to cause repricing in the investment market. Yields continue to rise in most markets, although some parts of the UK market notably saw very modest movements and, in a couple of cases, negative shifts.”

Source: CBRE

via Rents falling and yields rising across EMEA in first quarter 2009 (EMEA).

Volumes Down but Signs of Improving Sentiment

London, 15th April 2009 – Direct investment in European commercial real estate reached €12bn in Europe in Q1 2009, down 30% on volumes in the previous quarter and 70% lower than Q1 2008, according to new research from Jones Lang LaSalle. Core Western European markets accounted for 95% of total investment volumes, whilst Central and Eastern European markets saw very little activity.

Tony Horrell, Head of European Capital Markets at Jones Lang LaSalle said: “In the first quarter of 2009 we have noted improving sentiment and increased bidding; in the last three months we have seen investors seeking high quality and long term good income. However there is a lack of good prime product and at the same time the accepted definition of the prime asset class has narrowed considerably. Whilst yields in some markets moved out marginally in the last quarter, yields in many markets remained stable, for example in the City of London, Amsterdam, Frankfurt, Hamburg, Munich and Paris. This genuine interest from some investors is a positive sign but only time will tell if key deals will sign in the coming months.”

In the UK direct commercial real estate investment volumes were €4.4bn in the first quarter of 2009, a slight upturn (4%) compared to the previous quarter, and largely accounted for by transactions in the central London market. In Germany €1.6bn was transacted in the quarter, down almost 50% on the previous quarter; the lack of transactions reflecting a ‘wait and see’ attitude from domestic investors who have not been forced into distressed selling as well as the lack of debt required to fund larger transactions. Investment activity in Central and Eastern Europe (including Russia) was limited to a handful of transactions in Q1 2009, totalling €536m.

via Uutiset. Jones Lang LaSalle.