A €600 million record-breaking volume of investments in commercial real estate in Slovakia was realized in the first half of the year 2022. The volume is largely due to the transfer of part of Penta’s original portfolio to the new developer Alto Real Estate.
Slovakia continues to maintain its reputation as a safe investment location with competitive yields, according to Cushman & Wakefield’s latest report – writes Property Forum.
The first half-year of 2022 was the strongest in the last 20 years
The total volume of commercial real estate transactions in Slovakia exceeded €600 million in the first half of 2022, making it the strongest half-year in the last 20 years. Despite the Russian invasion of Ukraine after the years of coronavirus pandemics, the optimism of investors persists, as evidenced by the number of ongoing transactions. The amount reinvested represents a slight increase over the first half of 2021 and a 52% increase over the average for the same period of the last five years. A total of eleven transactions were completed, five of which were outside Bratislava.
The office sector confirms its stable position
Closed and ongoing transactions show that investors’ interest in office buildings is growing. The acquisitions of the Digital Park II and Sky Park Offices became the dominant transactions in the first half of the year as part of the transfer of part of Penta’s portfolio into the hands of the new developer Alto Real Estate. At the same time, they contributed to a significant share of domestic capital in the commercial real estate market. Other transactions include the acquisition of the historical monument Pradiareň 1900 – recently converted into first-class office space receiving the BREEAM certificate with the best rating of excellent.
“Due to rising inflation and increasing interest rates, we see very limited room for yet another compression of prime yields. This is one of the reasons why the expected yields decreased in 2022, reaching 5.00% for office buildings and 5.25% for industrial commodities. It has thus reached its historically minimum value for the given commercial real estate sectors. One of the sources of possible growth in the value of real estate for the coming year may be the indexation of rents” – Marián Fridrich, Head of Cushman & Wakefield Slovakia told Property Forum.
A downturn in the industrial sector
The industrial sector, which has maintained a stable half-year reinvested amount on average of €130 million over the last five years, experienced a downturn in the first half of 2022. This is due to the lack of properties meeting the expectations of investors available for purchase, as in recent years most of the so-called “Class A” buildings changed hands. Although two transactions were carried out in the industry, they accounted for only 6% of the total transaction volume. This involved the acquisition of Billa’s warehouse by the Swedish real estate investment fund EQT Exeter, and a business transaction in Beluša, which was purchased by the third investment and development group Arete Invest.
The retail market is recovering
Easing the pandemic-related measures in the first quarter brought about a recovery in the retail sector, which is also confirmed by the transaction of the Atrium Optima shopping centre in Košice, where Slovak investors. The sale of the largest shopping centre outside the Bratislava region with a total leasable area of 49,000 sqm reached a value of €118 million. The acquisition of the portfolio of four Max shopping centres by the Austrian real estate company Supernova only confirms the increased demand for these properties. The retail market is experiencing a major recovery in investment activity after fluctuations over the last two years.