In first quarter this year, real estate investments sank 80% from prior year period, with only one deal being consummated: the acquisition of investment fund Fabian by Black Sea Global Properties (BSGP), headed by Romanian tycoon Dinu Patriciu. Experts polled by Wall-Street explain the underlying causes of market failure and what type of real estates investors hunt for in 2009.
Troy Javaher (photo), Head of Capital Markets with real estate advisory firm Jones Lang LaSalle (JLL), says the volume of real estate investments fell 80% in first quarter 2009 from prior year period. Moreover, analysts expect a further contraction of the investment flow in the second quarter, both in Romania and in other Central and Eastern European countries, especially in Hungary, Czech and Poland.
“The bid offer spread - that is, the difference between what owners are requesting and buyers are willing to pay - has contracted, but remains sufficiently large that transactions limited”, Troy Javaher told Wall-Street.
As for investors’ approach, they took a different view in relation to particular countries in the CEE in first quarter. The German funds who remained active in CEE continued to dig for high-quality real estates with focus on Poland and Czech Republic.
“We believe that this is a short-term situation and the interest in Hungary and Romania will be increase, but pricing in these two countries will first need to be adjusted to attract the more core-level investors”, JLL’s analyst said.
The upgrade of the country risk jars investors
The only deal completed in first quarter was the acquisition of Fabian investment fund by Dinu Patriciu, a portfolio acquisition that is not allowing an individual evaluation of the real estates’ yield, as Blake Horsely, Investment Sales at Colliers International noted.
The underlying causes of the investment flow
