Download DTZ investment market update

MEDIA RELEASE
August 28th 2012
Ukraine defies slowdown in Central European investment market activity in Q2

Total real estate investment activity in Central European markets declined to
€327 in Q2 2012, down from €834m in Q1

Czech Republic and Poland continued to dominate the Central European
investment market in Q2, with the resilience of Czech and Polish banks assisting
domestic investment

Offices became the preferred asset class among investors, while retail registered
a strong decline predominantly due to limited retail asset opportunities

Sovereign crisis continues to impact negatively on economic outlook in the
Eurozone as well as CEE. Poland and Romania least impacted.
London: DTZ, part of UGL Services, a division of UGL Limited (ASX: UGL), today released its
CEE Investment Market Update. The new report from DTZ Research, shows total direct
commercial real estate investment in Central European declined to €327m in Q2 2012, a 60%
decline quarter-on-quarter. Total investment in H1 2012 now stands at €1.2bn, 25% below the
H1 average (since 2001) of €1.6bn.
Magali Marton, Head of DTZ CEMEA Research, said: “After two years of steady growth
between 2010 and 2011, investment volumes in Central Europe declined by 47% in H1 2012.
The decline was particularly marked in Q2. However, there was some disparity between
different markets in the region. The Czech Republic actually recorded an increase in
investment volumes reaching €159m in Q2 following a low level (€20m) in Q1. In contrast,
Poland, which usually dominates CEE market activity, registered a strong decline from €717m
invested in Q1 to only €122m in Q2. These two countries represent 90% of market share in H1
2012.”
Domestic investors came back in Q2 2012 with €100m of sales in the Czech Republic and in
Poland. Intra-regional investors - those located in Europe but investing outside their home
markets – were less active in Q2 with volumes declining from €587m in Q1 to €156m in Q2.
Offices continue to be the preferred asset class among investors in Central European markets
and accounted for 60% of the investment volume in Q2. The lack of retail assets opportunities
appeared to constrain Q2 market activity. Investment in retail accounted for €106m in Q2, far
below the historical quarterly average of €471m since 2010. By contrast, investment in office
appeared to be more resilient with €207m of acquisitions in Q2, below the historical average at
€389m.
Magali Marton continued: “Looking forward, uncertainty surrounding the European sovereign
debt crisis and weak economic growth is likely to impact investor sentiment. Furthermore, the
impact of banks deleveraging is yet to be seen in the CEE countries. For the time being, local
banks have proven to be resilient. However, the impact of new regulations have prompted a
withdrawal of funds by foreign banks and as a result, investment is expected to contract further.”
Meanwhile, Ukraine has seen over the same period the largest single investment into real
estate in Ukraine with the acquisition of Ocean Plaza by CIS investor ‘TPS’. DTZ are also now
appointed on the sale of two major commercial real estate assets in Ukraine where interest from
both domestic as well as foreign investors is proving to be strong. Nick Cotton, Managing
Director of DTZ Ukraine reported “Whilst the availability and cost of debt finance continues to
hamper traditional investors into real estate in Ukraine, given the relatively low opportunity cost
of capital placed into other investment destinations, high net worth organizations in Ukraine are
increasingly coming to realise that once again prime commercial real estate is presently undervalued and, offers opportunities for high initial returns coupled with likely capital growth”
For further information please contact:
Anastasiya Dubova
Marketing and PR Executive
DTZ Ukraine
Tel: +38 095 272 0771
Email: [email protected]
About DTZ and UGL Services
DTZ is now combined with UGL Services. UGL Services is a division of UGL Limited. The combined business of DTZ
and UGL Services is now one of the largest property services companies in the world. It provides corporate/occupier
clients with a global, integrated, end-to-end service offering and best-in-class investor services capabilities in
investment agency, leasing agency, property and facilities management, project and building consultancy, valuation,
and investment and asset management. The organization has 47,000 employees including sub-contractors – 26,000
employees and 21,000 contractors, operating across 217 offices in 52 countries. The revenue for year-end 2012 is
US$1.7 billion. For further information, visit: www.dtz.com and www.dtz-ugl.com
About UGL Limited
UGL Limited (ASX: UGL) is a global leader in outsourced engineering, property services and asset management and
maintenance delivering essential services that sustain and enhance the environment in which we live. UGL
comprises three business units including Engineering, Operations & Maintenance and Property providing services
across the power, water, rail, resources, property, infrastructure and defence sectors. Headquartered in Sydney,
Australia, UGL operates worldwide across 45 countries employing approximately 55,000 people. For more
information, visit: www.ugllimited.com
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