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Oct 08, 2009 15:24 EEST
October 8 (SeeNews) - Bulgaria, Romania and Montenegro are expected to absorb more property investments in the second half of 2009 than they did in the first half of the year, real estate consultant Colliers International said in a survey.
The other two countries from southeast Europe covered by the survey are Croatia, set for a similar investment volume compared to the first half of 2009, and Serbia, which is expected to see a contraction in incoming property investment compared to the first half of the year. The survey covered 35 countries in Europe, Middle East and Africa (EMEA).
With EMEA investment volume at a two-year low of 32 billion euro ($47.2 billion) in the six-month period through June 2009 (some 60% lower than in 2008 H1), two thirds of the countries surveyed expect to see higher volume in the second half of this year, the report said.
"Continuing the theme from the early part of the year, private investors are by far the most active investor type throughout EMEA, while institutional investors are choosing their targets carefully, and still avoiding some Central and Eastern European countries, including Bulgaria, Croatia, Greece, Hungary, Romania, Slovakia, and Ukraine."
"Across the region, the trend towards increasingly local transactions continues. In many countries – including Croatia, Denmark, Germany, Ireland, Israel, Italy, Norway, Sweden, and Turkey – domestic players account for the majority of the investment activity."
With fewer than one-in-three EMEA countries anticipating further softening over the next 6 months, property yields appear to have stabilised, the report said. In Western Europe, prime office yields have settled between 5.0% and 6.5% for the time being. In the Baltic States, Russia and Ukraine, however, prime yields remain at 10% or higher.
"Further office rental declines expected across the region (including in Brussels, Bucharest, Copenhagen, Dubai, London, Geneva, Madrid, Paris and many others) mean that capital values will continue to fall."
Prime property yields in Bulgaria and Croatia are forecast to remain unchanged over the next six months across all three commercial property categories - office, retail and logistics/industrial, while secondary yields are seen rising.
In Serbia and Montenegro, yields are forecast to remain stable over the next six months for both prime and secondary properties.
In Romania, only secondary retail yields are expected to increase over the next six months with prime and secondary yields on all other property assets seen flat.
"In the current environment, buyers (and lenders) still favour core office properties in prime locations with long term leases held by blue chip companies or government institutions. In the office sector, many cities in Western Europe are still attracting buyers, but in Eastern Europe investor interest is almost exclusively in the capital cities (Sofia, Zagreb, Prague, Bucharest, Athens, etc)," the report said.
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