Record-breaking year
Prologis
Prologis has released its full-year 2016 activity for business in CEE. The company leased 1.8 million sqm in CEE. New lease agreements accounted for 700,000 sqm and lease renewals for 900,000 sqm, with the balance short-term agreements. The CEE portfolio occupancy rate was a record 96.4 percent. At year-end, Prologis’ CEE portfolio was 4.5 million sqm.
“We experienced a record-breaking year for Prologis - globally, across Europe and in CEE,” said Martin Polak, senior vice president, regional head, Prologis CEE. In the company began construction of 18 buildings totalling 331,000 sqm - 70 percent of that construction was build-to-suits and 30 percent was speculative development. New development starts increased over 2015 by some 65 percent. The company continued to pursue its strategy of selective development in key markets characterized by low vacancies.
Strong Operating Indices in 2016
Sochi Hotel Market
“Quality Sochi hotels in both clusters have had a tremendous year once again – RevPAR gains of 61% in the mountain cluster and 39% by the sea YoY tell the story very well. However, the underlying reasons of this success are different for each cluster: while in the mountains the revenues grew mainly due to rising occupancy, by the sea it can be attributed to growing rates", said Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS.
“If for 2015 we reported a YoY drop in ADR in Krasnaya Polyana hotels vs. the Olympic 2014, now we can firmly say that even without the support of a global-scale sporting event, the hoteliers managed to increase rates in 2016", so Veller “In 2016 the average daily rate in mountain cluster grew by 11% compared to 2015 and reached RUB 5,000 (vs. RUB 5,200 in 2014). ADR in the sea cluster also showed a healthy increase – by 21% compared to 2015, reaching RUB 9,800.” There has also been movement in the room stock in Sochi in 2016 – two hotels in Krasnaya Polyana were rebranded to Azimut – Freestyle and Valset Apartments in Roza Khutor (totaling 568 rooms). There is also a first after 2014 international opening planned for 2017 in the market – a 345-room Courtyard by Marriott should start welcoming guests in Sochi’s downtown.
Veller: “The 2016 results of Sochi hotel market confirm that this all-season resort in the South of Russia firmly grabbed a position as one of the main touristic destinations of the country. Naturally, one may argue that reopening of the budget beach destinations such as Turkey could possibly have negative effect on hotel operational indices’ dynamics of this domestic resort. The logical answer for Sochi will be to start introducing all-inclusive concepts to stay competitive and satisfy the domestic travelers’ demand for this type of product.”
First investments in Croatia and Hungary
M7
M7 Real Estate, the pan-European investor and asset manager, announces that it has made two further acquisitions for the recently launched CEREF I fund. The acquisitions in Croatia and Hungary totalling €14 million mark M7’s first entry into both countries. M7 has acquired a real estate portfolio from Recovery Zrt., the asset management company for CIB Bank in Budapest, Hungary. The portfolio consists of two retail centres where tenants include Kik Fashion, Deichmann and DM (Drogerie Markt) as well as an 11,500 sq m vacant standalone urban logistics asset. In a separate transaction, M7 has acquired the Mani Business Centre, a 13,915 sq m multi-tenanted office park in Zagreb. Mani Business Centre currently has a WALT of 1.23 years and is 84% occupied with tenants including Croatia Airlines, Peugeot Croatia and Optima Telekom.
M7 has identified a number of asset management initiatives to drive value at both assets, including working with existing tenants to achieve higher occupancy rates with longer lease terms, the letting of void space, and carrying out a selective capital expenditure programme.
Richard Croft, M7’s Chief Executive said, “M7 CEREF I is our first fund focussed entirely on Central Europe and these high yielding assets which offer plenty of hands-on asset management potential and are located in the capital cities of their respective countries are exactly the type of investment we are looking to make for CEREF I. They are an ideal entry point for M7 into both Hungary and Croatia and we hope to announce similar investments on the behalf of the fund in the near term.”
Outperform rest of CEE
Czech-Republic and Hungary
Occupier and investment sentiment continues to be positive across Central and Eastern Europe according to the RICS Commercial Property Monitor for Q4 2016. Hungary and the Czech Republic remain the most upbeat markets, with Bulgaria and Croatia also gaining momentum. In Romania the pace of growth seems to be slowing down, although sentiment and projections continue to be broadly positive. The RICS Occupier Sentiment Index (an overall measure of occupier market momentum) is still positive across all five countries and continues to signal an improvement in overall occupier market conditions in each market.News Ticker
Poland: Philips Poland will move into Symetris Business Park II in Lodz. Bosnia and Herzegovina: Orbis Group enters Bosnia and Herzegovina with signature of a franchise agreement for MGallery by Sofitel Tarcin Forest Resort & Spa. Romania: Aberdeen Asset Management sells Bucharest office building. Czech-Republic: Peakside Capital buys Argo Alpha, a Prague office building.