Baltic The mood of real estate investors is to buy rather than sell assets, according to the results of a survey conducted by the company “Colliers” in June this year. This position will continue to affect supply and thus yields.
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Given the general trend in Europe, investors will continue to “hunt” industrial and logistics complexes in all three Baltic countries due to favorable market conditions, the company’s experts estimate. In the first half of this year, five of the ten largest transactions in the region took place in the industrial sector. Market players have also paid considerable attention to the previously neglected segment of residential rental houses.
According to Colliers, total investment in commercial real estate in the Baltics in the first half of 2021 amounted to approximately 672 million euros, an increase of 42% compared to the same period in 2020. The company’s analysts predict that the volume of transactions will exceed one billion euros a year this year as well. This will largely depend on the number of large transactions this year, the expected two to three large-scale transactions may significantly increase total annual sales, and investment activity will continue to be affected by the economic and epidemiological situation.
The share of local and Baltic investors will increase during the year and the availability of capital will convince investors to look for new opportunities, another trend is noted by experts.
“At the moment, we can clearly see that the amount of investment was mainly due to the activity of Baltic investors, but this does not mean that their composition has changed structurally. We see the effect of travel restrictions, which benefits investors with their local teams. In terms of profitability, we see the largest price increase in the industrial and small office segments, where the quality of the building and the tenant situation best meet current investors’ desire to invest in stable cash flow facilities. with a strong anchor tenant (such as a grocery store), but other types of assets are currently considered risky. Angela Kolesnikova.
In the survey, the majority of surveyed investors (80%) emphasized that the availability of commercial property is currently the biggest challenge, while the solvency of tenants is less worrying compared to 2020. Most of the surveyed investors plan to buy new assets next year, however, they believe that the corresponding offer may be limited. 60% of respondents indicated their willingness to invest in all three Baltic countries, but 20% are considering investing outside the region.
As a market with relatively higher returns on good quality products, the Baltic States continue to attract interest from global capital. However, the issue of insufficient availability of suitable assets remains a limiting factor for a larger number of transactions.
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