CBRE: Search for yields leading investors into CEE

As prime yields in Western Europe fell sharply last year CEE’s attractiveness to real estate investors more than quadrupled, according to CBRE's latest investor survey.

Central and Eastern European property markets saw their proportion of investor preference rise from 6 percent in 2015 to 23 percent in CBRE's 2016 EMEA Investor Intentions Survey.

The report, which was released today, said the greater attractiveness of the CEE can partly be explained by investors' continuing 'search for yield'. 

In the second half of 2015 prime yields in Western Europe fell dramatically and this resulted in the yield gap between CEE and Western Europe increase markedly, raising CEE's attractiveness to real estate investors, according to the report.

For the more mature real estate markets within Europe diverging investor views were prevalent in the responses given for the most attractive country. Germany was the most frequent choice as investors' preferred destination, with 17 percent of all responses. The UK was in close second place with 15.1 percent, followed by Spain (10.2 percent), Netherlands (9.9 percent), France (9.2 percent) and Poland (9.2 percent).

More importantly however, this was by far the closest result of any of CBRE's prior seven surveys, with many more markets coming into the mix this year, the report said. 

The search for yield was also apparent in respondents' answers to the 'alternative' sector. The survey revealed that 56 percent of all respondents were already invested in one or more alternative sectors, and 57 percent were actively looking in one or more of these sectors.

Student housing was the segment that attracted the most new interest with 20 percent of respondents already having investments in this area, and most of them seeking further exposure. Close to 13 percent of respondents said they were looking to invest in student housing for the first time.

Across the more traditional sectors, offices remained the favorite asset type with 37 percent of the respondents. However it was residential assets which saw the biggest increase in investor interest, growing from 5 percent of preferences in 2015 to 12 percent in 2016.

“There were a few stand-out themes in our survey this year, but the most interesting, to my mind, is investors' purchasing activity. Almost 85 percent of respondents expect their purchasing activity in 2016 to remain higher or the same as last year. This result, taken alongside similar figures for investors' selling intentions, indicates that we are set for another year of strong investment activity,” commented Jonathan Hull, managing director of Investment Properties, EMEA at CBRE.