International real estate developers searching for new opportunities in CEE, Romania included

International investors such as Savills IM, Corpus Sireo, KGAL or Benson Elliot have broadened their search for returns, while analyzing opportunities offered by Poland, the Czech Republic, Romania and Hungary, reads a press release by Skanska development and construction company.

2017 prime office yield forecasts as stated in the CEE Investment Report 2016: Mission to Outperform remain favorable with 7.5% in capital cities such as Bucharest, and in Polish regional cities with yields as high as 6.75% in Poznań and 7.25% in Katowice and Łódź.

Breakthrough transactions, such as the sale of Skanska CDE’s office building portfolio to Swedish fund manager Niam, are the best illustration of the investors’ interest pivot towards Eastern Europe.

“For Skanska CDE it was the company’s first ever portfolio deal in CEE, and for Niam it was their first office acquisition concluded in the region. Working with a new buyer is always a challenge for our transaction team, because we have to get to know our new partner, develop a good working relationship and most importantly establish mutual trust. The portfolio covered four office buildings in two Polish regional cities: Kraków and Katowice. Two of them were completed at the moment we signed the purchase and sales agreement, with the other two still under construction. The last remaining asset, Axis in Kraków, is scheduled for completion in Q4 2016 with the building’s sale being concluded at the same time. Niam’s decision to acquire a four-building portfolio, in a brand new location, and still partly in the construction phase, shows the Polish market’s maturity, attractive returns and Skanska’s position as a top developer of prime office assets,” says Adrian Karczewicz, Head of Divestments CEE at Skanska Commercial Development Europe.

Real estate agencies highlight the fact that there are now new capital flows into Poland from different corners of the globe with European investors no longer the only ones seeking attactive assets in the region.

“The diversity of the investor pool is growing with capital from South Africa and Asia (in particular Singapore, Malaysia and South Korea) looking to enter the Polish market either directly or through money managers. We are also seeing sustained activity from European players. Buyers such as Benson Elliot, Warburg HiH and Golden Star have all made a statement by finalizing acquisitions during the last 12 months,” comments Piotr Mirowski, Partner at Colliers International, Director of Investment Services in Poland.

Other CEE commercial real estate markets are also receiving increasing attention from new global players in 2016 with their transactions accounting for ca. a 33% share of total investment volume in Romania, and 25% in Hungary. “The Hungarian market is active with a post-2007 high of €900 m in completed deals to date and an estimated total of €1.5 bn by the end of 2016 with benchmark yields to be set along the way. Romania has seen approx. €300 min deal volumes to date, and new investors are emerging such as the PPF Real Estate, which acquired the Metropolis Center office building in Bucharest in Q1 2016,” adds Piotr Mirowski.