Budapest is the cheapest in the Visegrád Four - CBRE
May 11th, 2012
Many European markets saw a
rush of deals being completed towards year end. Overall, 17 out of the 26
markets monitored by CB Richard Ellis reported Q4 2009 as having the highest
quarterly turnover of 2009. - it was revealed at the annual press conference of
CBRE.
"As a result of increased investment volume
in the mature western markets a positive impact in investor confidence within
the CEE region has occurred, although when this actually happened is hard to
pin point. Uncertainty over economic prospects in the region prevailed in the
first half of the year meaning that many investors focused their attention
elsewhere," said Adrienne Konthur, Managing Director of CBRE Budapest.
"However, it is now clear that positive
sentiment has returned, although investors are maintaining a very conservative
approach," she added.
European activity
Almost 40% of the annual turnover was realized
in Q4. Traditionally, Q4 is the busiest quarter of the year, therefore seasonal
effects have also played a part in these activity levels. Nevertheless, the
trend is promising.
Although the total 2009 turnover of EUR 70
billion shows a significant decrease year-on-year compared to the volume of EUR
121 billion reported for 2008 as a whole, CBRE expects the European investment
market to pick up on growth in 2010.
A very sharp turn-around in activity occurred in
Europe during the course of 2009. Following a recovery in sentiment from around
April, completed transactions picked up strongly from mid-year. Most notable
was the fact that transactions in both France and Germany - the two largest
markets in continental Europe - more than doubled in H2 compared to H1 2009.
Investment in the UK continued to increase, with
H2 growth of 64% relative to H1 2009. This was below the European average, but
reflects the fact that the UK market had already started to recover by the
middle of the year, earlier than most other markets. CEE experienced a
particularly sharp uplift in H2, but this was coming from a very low base.
"Although turnover increased by over 300%
in the CEE region in H2 2009, the overall annual volume was down 75% when
compared to the volumes of 2008. Within this increased turnover the core CE
countries made up over 50% of the investment volume - a noteworthy increase
compared to previous years," commented Tim O’Sullivan, Head of Capital
Markets of CBRE Budapest.
He added that CBRE estimates the transaction
yield of premium property at 8.0% in Budapest, 7.5% in Bratislava, 7.0% in
Prague and somewhat below 7.0% in Warsaw. CBRE does not expect substantial
shifts in yields in the region in 2010.
CEE reviving
Local investors drove the CEE property
investment market in 2009 to a greater extent than in recent years, as many who
had been priced out in recent years took advantage of the retreat by
international investors to make opportunistic purchases, mostly of non-prime
properties. It remains to be seen whether local investors’ higher share of
turnover will become a longer-term trend or if they just took a larger slice of
a smaller investment pie in 2009, CBRE said.
"Hungarian investment volume in total
reached around EUR 500 million in 2009 (with H2 having a 77% share in total).
This figure includes purchases completed by owner occupier transactions. If we
exclude these, the pure investment turnover stood at about EUR 260 m,"
O’Sullivan said.
"For 2010, CBRE anticipates the turnover to
reach around EUR 400mln of investment volume; reflecting a similar volume to
that of 2009. The biggest bottleneck is the limited availability of the
prime/core defensive stock which the international investor is seeking,"
he concluded
"The buyers are there with money ready to
spend - but only for the right opportunity."
On the CEE occupational markets Gábor Borbély,
Senior Analyst at CBRE Hungary commented: "Vacancy and rental pressure
must be considered when purchasing a property as weaker economic performance
made office take-up figures fall across the region. Vacancy rates are
double-digit figures in every significant market but in Warsaw, and have been
steadily rising for the last six quarters. Higher availability rates keep rental
levels under attack and this is not going to ease any time soon in many
markets."
"As demand is likely to lag behind the
average of the previous half decade, vacancy (and rental pressure) can be
reduced only with absorbed oversupply. This is not going to be fast and will
show different dynamism across different locations, depending whether the
development wave has already passed in the individual cities." Borbély
added.
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