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Prague, 30 July 2012 – According to the most recent Jones Lang LaSalle CEE Investment Market Overview the Central and Eastern European real estate market has seen an approximately 40% drop in volumes transacted compared to the same period in 2011. For H1 2012 Jones Lang LaSalle has recorded a regional investment volume of 1.26 billion EUR. Poland remains the most active market with close to 70% of the total regional transaction volume. Activity in H1 2012 in the Czech Republic reached approximately 225 million EUR and in Hungary 71 million EUR. Slovakia, Croatia and Serbia have not yet registered any transactional activity.
Focus on the Czech Republic
Following a very active 2011 when investment volumes exceeded 2 billion EUR, the first half of 2012 was slow with limited activity. Investment activity in H1 2012 reached approximately 225 million EUR, representing a significant year-on-year decrease of 65% compared to ca. 650 million EUR in H1 2011. The highest activity was seen in the office sector with three properties transacted in Prague and one in České Budějovice. The first transaction was the sale of the office project known as 4D Kodaňská Office Centre by Orco´s Edurance Fund to Daramis Group for ca. 20 million EUR, followed by the sale of the Radio Free Europe Building to American private equity group L88 for a quoted price of 94 million US Dollars (ca. 74 million EUR). Finally, German fund Deka Immobilien acquired City Green Court from Skanska Property Czech Republic for ca. 54 million EUR. After limited investment activity in the regional office sector, German fund Hannover Leasing sold an office project leased to E.ON in České Budějovice to a private investor.
The second most active sector was retail with two portfolio transactions. CPI acquired the remaining stake in a retail portfolio owned by VT Holding for 34 million EUR. A new entrant to the Czech market is the private equity real estate investment management firm Bluehouse Capital, who acquired a portfolio comprising an Interspar hypermarket in Znojmo and Euro Center in Hradec Králové from Carpathian Asset Management.
There was one hotel transaction concluded, whereby Frankfurt-based HPI Germany Hotelbesitz GmbH (an affiliate of Pentahotels), acquired the IBIS Hotel in Prague 8 from Quinn Group.
“There is currently more than 1 billion EUR of commercial real estate investment product being marketed across the Czech Republic. The most active investors are relatively busy reviewing new opportunities and undertaking due diligence. The limited activity in H1 2012 is a result of a number of factors, but specifically the fact that banks are highly selective and conservative to whom they will finance, on which projects and on the terms of debt. Projects without any transferable debt, or where new financing is required, are more difficult to win investor focus unless absolutely prime in nature,” says George Lewis, Head of Capital Markets team at Jones Lang LaSalle.
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