Year-end volumes may reach €7.0 - 7.5 billion, about 30% below the 10-year average, reveals Colliers in its latest “Q1-Q3 CEE Investment Scene” report.
The CEE-6 economic climate
Silviu Pop, Director, CEE & Romania Research at Colliers comments: “Donald Trump’s 2024 election win has raised concerns in Europe, with analysts expecting a return to his 2016-2020 policies. This could negatively impact Western Europe, especially Germany, which is CEE-6’s top export partner (27% of exports in 2023). A decline in capital flows and increased risk perception for the Eurozone are anticipated, adding uncertainty to CEE economies and local asset risk. Clarity on Trump’s geopolitical stance will be crucial in early 2025”.
Pricing correction
The region has seen less pricing correction than Western Europe over the past 18 months, leading to a slower recovery. Further correction is expected in 2025 as deal activity picks up, though at varying rates across the CEE-6 countries. CEE Investment volume growth rates: Q1-Q3 2024 vs. Q1-Q3 2023 & Q1-Q3 2022 Volumes for Q1-Q3 2024 across CEE were recovered since the lowest results in 2023 and are expected to rise to levels above €10 bn again in 2025. On average, volumes for the region increased by 24% YoY but declined by 37% against Q1-Q3 2022.
At almost 55% share, Poland secured a majority of regional volumes, with local activity picking up notably over the second and third quarters. Following the slow activity of last year, some markets recorded significant YoY growth. Across the region, recorded results varied widely, from a 63% YoY drop in Slovakia, to a 190% YoY growth in Romania. The market is still not fully back to its feet and most deals happen on an off-market basis. A more meaningful recovery is expected in 2025 but still depends greatly on an improved, economic, inflationary and interest rate environment.
CEE Flows by sector
Office transactions are still on the decline, both globally and in CEE. In Q1-Q3 2024, I&L and Offices represented an equal share of total volumes, just below 29%, with Retail transactions following closely at 26% of total volume.
In Q3 2024, the largest transactions were all from the Industrial sector, and all over €100 million. The two largest transactions were in Poland – an industrial park and a share in an industrial portfolio, the third largest transaction took place in Romania and it concerned a sale of two industrial portfolios.
CEE Flows by the origin of purchaser
CEE-6 capital continued to be the most active in Q1-Q3 2024 but has now decreased below 50% share of total regional volumes. Czech capital secured the highest share of volumes with 30%. European capital was the second most active, with the notable role of UK capital, which secured a 13% share of total volumes.
Outlook for 2025
Looking ahead to 2025, there is cautious optimism as pricing appears to have stabilized, and expected European Central Bank rate cuts could boost market activity. However, a broader recovery in transaction volumes isn’t likely until Q3 or Q4. The region’ economic growth, especially compared to Germany's recession, combined with stabilizing prices and returning institutional capital, points to better conditions by 2026. Current deals focus on value-add and opportunistic strategies, particularly in repriced sectors, though a significant pricing gap remains, especially in logistics.
Colliers
