On a wave of last year’s transactional success, which cemented the position of the company in the commercial real estate market and strengthened its positive image in the eyes of investors from around the world, Skanska continues the strategy of unceasing development in four CEE countries: Poland, the Czech Republic, Hungary and Romania.
In 2014, investors purchased from Skanska nine buildings worth EUR 330 million in total. This accounted for more than a 10% share of the office transaction market in CEE and more than 50% of such transactions realized by the company globally. Developments sold were located in three Polish regional cities (Cracow, Wroclaw, Lodz) and in the capitals of the Czech Republic, Hungary and Romania. This year, developer has announced the offer for sale of seven office buildings including Green Court Bucharest B in Romania, Corso Court in Prague, the Czech Republic, and Malta House in Poznan. This is the first time Skanska has offered for sale a portfolio of Polish office buildings. Announced in March, the portfolio comprises Kapelanka 42 A and the Axis developments in Cracow, and Buildings A and B at the Silesia Business Park in Katowice. The four Polish investments provide more than 63,000 sqm of office space and the deal process is at an advanced stage. The decision to sell the first office portfolio in CEE this year reflects the situation of the Polish market, which is seeing continued and increasing interest in portfolio and platform deals . Skanska is a transactional leader in regional cities. These locations continue to strengthen their position on the CEE investment map, especially in Poland, where almost 60% of transactions in H1 2015 were concluded outside of the capital .
Increasing investment activity is resulting from factors including the attractive prime office yields in CEE, which compare favorably to the more mature, western and northern European markets. These can be as high as 7.5% in Poland's regional cities such as Lodz or Katowice. The Polish market is still dominated by foreign investors, who accounted for 90% of all purchases. The most active players in H1 2015 were American, being responsible for almost 45% of all foreign investment .
Although the Polish share of transactions is small, increasing activity by national investment funds is noteworthy. Malta House, Skanska’s first office project in Poznan, was purchased in August by a vehicle created by REINO Partners and Bluehouse Capital Advisor. This is Skanska’s second development bought by vehicles arranged and managed by REINO Partners in Poland. The first deal was in 2014 and concerned the Kapelanka 42 B building in Cracow. The attractiveness of product that Skanska brings to the market - modern, LEED-certified, high-quality buildings in good locations, with long-term lease agreements with prestigious tenants - provides an excellent prospect for maximizing yield potential.
According to Skanska’s observations and market data published by real estate agencies, the European commercial real estate sector achieved in H1 2015 its greatest transaction volume since 2007. The Czech Republic leads the CEE region in terms of overall transaction volume, followed by Poland, Hungary and Romania. Office deals dominated the market, and investor appetite for this type of project is still rising. Investment activity will lead to further market maturity and, as a consequence, a slight decrease in yields. However, more often than not, CEE investment product provides a higher return than similar assets located in western European countries.