Budapest is the cheapest in the Visegrád Four - CBRE

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. 

Portfolio.hu