Commercial property investment volumes in Central and Eastern Europe (CEE) totalled €8.7 billion at the end of November 2011, twice the level registered in the same period in 2010, according to the latest data from CBRE.

Based on the pipeline of deals waiting to be closed till the year-end, 2011 investment turnover could become CEE’s third strongest year in history. The year’s total is significantly below the peak achieved in 2007 (€14.6 bn); however, it’s already close to the third strongest achieved in 2008 of €9.5 bn.

Jos Tromp, Head of CEE Research & Consultancy, CBRE, commented: “Despite the volatile market sentiment in recent years, CEE has managed to attract a significant amount of capital to be invested in real estate. On the one hand this is to be explained by value-add and opportunistic money flowing to Russia. On the other hand, Poland and the Czech Republic, in particular, are continuing to attract risk-averse investments. It is likely that CEE will keep this ambivalent character into 2012, with one difference compared to recent years: a significantly reduced pipeline under construction which is expected to lead to a further divergence in the performance of prime versus non-prime.”

Despite the strong performance to date in 2011, continued uncertainty surrounding the sustainability of the eurozone has now started to affect property investment deal flow in most CEE markets. Based on October and November results, the total amount in the fourth quarter of 2011 (€550 mln) is currently significantly below the quarterly average measured during Q1-Q3 2011 (at least €2.5 bn per quarter).

Despite a slowdown of activity the continued domination by the Polish, Russian and Czech markets is visible, based both on transactions closed as well as on the significant pipeline of deals waiting to be closed. Increased risk perception across Europe has also started to affect the Hungarian and South Eastern European (SEE) markets again in recent weeks. This is reflected by generally less interest in these markets by the international investment community. With the exception of some activity in Romania, Southeastern Europe has remained quiet since the summer, whilst several transactions closed during H1 2011.

Patrick O’Gorman, Director of CEE Capital Markets, CBRE, added: “A new wave of uncertainty has started to significantly impact the availability of financing. Since CEE is still strongly dependent on Western European banks, this is likely to restrict deal flow into 2012. The direct impact is that transactions take longer to complete or collapse. Larger scale transactions are particularly feeling the impact, with some postponed to 2012 depending on bank finance. With all of this uncertainty in the market, it is unlikely that investment volumes will increase further during the first quarter of 2012. Recent strong increases in investment volumes in CEE were dependent on some large transactions taking place, a factor less likely to remain a driver in the short to medium term future.

“With many investors struggling to negotiate bank finance, equity investors are now seeing less competition for conservative prime investments in most markets. Based on their risk/return-profiles it is likely that these investors will continue to focus their attention largely on prime assets in Poland and Czech Republic.”

Source: Property Magazine Internatonal

French state-controlled power giant Électricité de France SA said Monday it will invest around €1.8 billion ($2.41 billion) to build a 900-megawatt coal-fired plant in Rybnik, Poland, as part of its strategy to reinforce its activities in Central Europe.

The group said the investment was in line with its 2011-2015 financial guidance and was part of its objective to bring its total power-generation installed capacity to 200 gigawatts by 2020, 25% of which will be in fossil fuels.

The plant, which will be rebuilt from torn-down parts of an existing facility, will use "supercritical" technology that produces lower carbon emissions compared with a standard coal-fired plant. It is expected to start operations by 2018 and will also combine coal with biomass.

The Rybnik plant belongs to Elektrownia Rybnik SA, one of Poland's leading energy providers and 66%-owned by EDF. The rest is owned by EnBW AG of Germany.

The boiler island and the turbine hall will be provided by French engineering group Alstom SA. This will involve replacing the four oldest of the eight units at the Rybnik plant with a single one, EDF said. Rybnik was built between 1972 and 1978.

EDF is Poland's third-largest power generator. It has a 10% share of the country's power-generation market and average annual sales of around €1.2 billion, according to Gerard Roth, the head of the group's Continental Europe division.

"This project is profitable," Mr. Roth said. Carbon emissions at the plant will be cut by 30% once the new unit is built, he said. Demand for electricity in Poland is forecast to increase around 3% a year, EDF said, quoting estimates by the Polish energy ministry.

Source: The Wall Street Journal

Bulgaria's real estate investment trust ERG Capital 1 has sold the Commercial Center Oriflame in the capital Sofia to Bernard Investments after failing to strike a deal with Greece's Bluehouse Capital last year.

The price of the deal is EUR 1.63 M, down from the initial tag of EUR 2.3 M.

The sale makes it possible for ERG Capital 1, majority-owned by the Bulgarian-American Enterprise Fund (BAEF), to terminate its operations this year as planned upon its establishment seven years ago.

Bernard Investments is owned by French businessman Nicolas Rene Colonna Walewski, who came to Bulgaria last year. This is his third acquisition in the capital Sofia.

At the end of March, ERG Capital 1 shed its key asset in Bulgaria - a store of hypermarket chain Praktiker on Tsarigradsko Chausse for EUR 10 M.

The properties of Sofia-based ERG Capital 1 and ERG Capital 2 REITs were put on sale in a EUR 27 M deal in September last year. Greek investment fund Bluehouse Capital declared interest in the deal, but said it was willing to acquire only the retail properties.

That was the reason why the distribution center of the cosmetics company Oriflame, located near the interchange on the Tsarigradsko Chausse boulevard, was taken out of the package deal and put on sale separately.

Soure: Novinite