Eastern European Investment Market Has Shrunk By One Third

According to Colliers's latest analyses, in 2012 Eastern European investment market shrank by over one third in comparison to 2011.

The total value of investment transactions closed in Eastern Europe in 2012 amounted to €7.7 billion. In the previous year, it was €12.2 billion, which means that turnover was reduced by over one-third. However, according to Damian Harrington, Regional Director of Research for Colliers International: - “This figure should not be taken at face value, as the closing of large deals distorts the statistical year-on-year trends”.

The experts for Colliers stress the fact that the 2011 investment market was driven by very large ‘one-off’ deals, such as the Europolis Portfolio and Galeria St Pete’s deal. If these transactions had been closed in 2010 or 2012, the total worth for this market would have been much lower.

Moreover, there are four deals in Moscow, whose total worth exceeds €2.2 billion. They were  due to close in 2012, but at the moment of the report's publications, the deals still hadn't closed.

“Whilst the year-on-year statistics depict strong volatility, the clear underlying trend which is visible to us is that the markets which continue to attract real estate capital offer a combination of the following: liquid capital markets, including competitively priced debt provision; the availability of strong, core assets at reasonable pricing levels; positive economic and property market growth fundamentals. The markets which most benefit from these conditions are Russia and Poland. In 2012 they accounted for over 80% of all transactions and this trend will continue into 2013” - comments Damian Harrington.

The only Eastern European markets whose activity did not shrink in 2012 were Poland and Russia.

Colliers concludes that the recent years have been good for Eastern Europe despite deteriorating economic perspectives and decline in economic growth. According to prognoses, in 2013 European economy should bottom-out, whilst he operational capacity of banks and investors will remain hindered. This situation will contribute to curtailing activity outside of the larger markets.

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