Highest investment volume in
a decade
Baltics Investment, 2015
2015 CBRE Research © 2016 CBRE Real Estate Consultancy| 1
KEY POINTS
• Since 1st of January 2015 a currency risk has
been removed as the euro was adopted across
the Baltic countries
• The total investment volume for Baltic states in
2015 was of EUR 1.1 billion, the figure has
more than doubled when compared to 2014.
2015’s total volume was the highest since 2007
• Investors have changed their focus from 2014
and in 2015 invested in retail assets, investing
almost EUR 640 million EUR in the sector,
comprising 59% of all investment
• The largest acquisition in the Baltics was made
by Blackstone Group LP where three shopping
centres in Riga were acquired as a part of the
Obligo portfolio
Figure 1: Investment Volume per Country 2005 - 2015
• US investors accounted for almost 20% of all
Baltics investment volume in 2015
• Asking prime office and retail yield across the
Baltics was showing slight compression in second
half of 2015, this trend will continue in 2016
• Due to very active office market and rapid
development in this segment, the beginning of
2016 shows that investors focus is on the office
segment in Lithuania
• According to CBRE’s 2016 EMEA Investor
Intentions Survey almost half (48%) of all
respondents expect their purchasing activity to be
higher than in 2015, compared with just 15% who
expect to be less active buyers. 43% also expect
their selling activity to increase, indicating a
buoyant and liquid real estate investment market
for EMEA region in 2016
Source: CBRE Research, March 2016
*Arrows indicate change from the previous year
12 mEUR 7% EUR 1.097 billion
-200%
-100%
0%
100%
200%
300%
400%
500%
0
200
400
600
800
1 000
1 200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Gro
wth
, %
EU
R m
ln.
Latvia Estonia Lithuania Total Growth, %
7%
2015 CBRE Research © 2016 CBRE Real Estate Consultancy | 2
BALTICS INVESTMENT
M ACR OECONOM IC INDICATOR S
INVESTM ENT ACTIV I TY IN 2015
ESTONIA
Figure 2: Real GDP Growth Forecasts per country (2015-2017), %
Source: Source: Oxford Economics, 2016 – 2017 (forecast), March 2016
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
2015 2016 2017
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
Yearly I
nvestm
ent Volu
me (
in M
illion E
UR)
Czech Republic Hungary Poland The Baltic States
Romania Slovak Republic Russia BG, HR, UA, RS
Figure 3: Share of the Baltics in the Total CEE Investment Volume
(2005-2015)
Source: CBRE Research, March 2016
0
100
200
300
400
500
Latvia Estonia Lithuania
EU
R m
ln.
Office Retail Industrial Mixed-Use Hotel Residential Other
Figure 4: Investment Volume by Sector per Each Country, 2015
Source: CBRE Research, March 2016
79% 37% 72 %
-18%
2015 CBRE Research © 2016 CBRE Real Estate Consultancy | 3
Table 1: Newcomers in Baltic Countries during 2015
BALTICS INVESTMENT
LATV IA
L I THUANIA
BALTIC R EGION INVESTOR S’ P R OFI LE
Source: CBRE Research, March 2016
Country Newcomers in 2015
Latvia
Estonia
Lithuania
Latvia
33%
Estonia
43%
Lithuania
24%
38%
24%
18%
10%
8% 3% Western Europe
Baltic countries
United States
Scandinavia
Other
Asia (China, Singapore)
Source: CBRE Research, March 2016
41%
38%
18%
2%
Baltic countries
Scandinavia
Other
Western Europe
Figure 5: Total Investment Volume distribution by Country, 2015
Figure 6: Investment Volume by Country of Origin, 2 013-2014
Source: CBRE Research, March 2016
Source: CBRE Research, 2015
Figure 7: Investment Volume by Country of Origin in 2015
2015 CBRE Research © 2016 CBRE Real Estate Consultancy | 4
INVESTM ENT BY SECTOR
YI ELDS
BALTICS INVESTMENT
0
200
400
600
800
1 000
1 200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EU
R m
ln.
Office Retail Industrial Mixed-Use Hotel Residential Other
Figure 5: Investment Volume by Sector in the Baltics (2005-2015)
Source: CBRE Research, March 2016
16%
59%
7%
0%
5%
9% 4%
Office
Retail
Industrial
Mixed-Use
Hotel
Residential
Other
Figure 6: Total Investment Distribution by Sector in the Baltics , 2015
Source: CBRE Research, March 2016
Figure 7: Prime Office Yields compared with other CEE countries, 2010-2016f
5,0
7,0
9,0
11,0
Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016f
Czech Republic Hungary Latvia Estonia
Lithuania Poland Romania Slovakia
Source: CBRE Research, March 2016
5,0
6,0
7,0
8,0
9,0
10,0
Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q2 2015 Q3 2015 Q4 2015
Czech Republic Hungary Poland Romania
Latvia Estonia Lithuania Slovakia
Figure 8: Prime Retail Shopping Centres Yield, 2010-2015
Source: CBRE Research, March 2016
2015 CBRE Research © 2016 CBRE Real Estate Consultancy 5
0
10
20
30
40
All C
EE
Countr
ies
Germ
any
UK
Spain
Neth
erlands
Fra
nce
Italy
Nord
ics
Oth
er
% o
f r
espondents
2013 2014 2015 2016
Figure 9: Most Attractive Markets: In EMEA, which country/region do you believe to be the most attractive for making property investment
purchases in 2016?
Source: 2016 CBRE Investor Intentions Survey, March 2016
BALTICS INVESTMENT
OUTLOOK FOR 2016
Investor Property Sector Country
Blackstone Group LP Part of Obligo portfolio: Alfa, Mols, Dole Retail Latvia (Riga)
Partners Group BPT Optima Portfolio Office, Retail,
Industrial Latvia, Lithuania, Estonia
Partners Group Warehouse, Shopping centre Retail, Industrial Estonia (Tallinn)
LCN Capital Partners Raadiku municipal housing Residential Estonia (Tallinn)
EfTEN Capital Radisson Blu Sky Hotel Estonia (Tallinn)
NHC Baltic Opportunity Fund Europa SC Retail Lithuania (Vilnius)
Westerwijk Investments Molas Retail Lithuania (Kaunas)
Zenith Capital Nordika, 1st stage Retail Lithuania (Vilnius)
East Capital Mustamäe Keskus Retail Estonia (Tallinn)
PBG Invest Holding Police House Office Estonia (Tallinn)
Table 2: Top Ten Investment Transactions in the Baltic Countries , 2015
Source: CBRE Research, March 2016
Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy,
we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and
completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be
reproduced without prior written permission of CBRE.
ABOUT CBR E IN BALTICS
• Headquartered in Riga, Latvia from 2011
• Headcount – 28 people
• Providing services in:
• Valuation,
• Consulting & Research,
• Property sales,
• Property & Asset Management,
• Tenant Representation,
• Agency Services – Retail, Offices, Industrial &
Logistics.
CONTACTS
BALTICS INVESTMENT
RESEARCH DEFINITIONS
Central and Eastern Europe (CEE) – includes the following
countries: Bulgaria, Croatia, Estonia, Latvia, Lithuania, the
Czech Republic, Hungary, Poland, Romania, Serbia,
Slovakia and Ukraine.
Prime Yield – represents the net yield that an investor
would receive when acquiring a class A building in a prime
location (for office in the CBD, for example), which is fully
let at current market vale rents. Prime Yield should reflect
the level at which relevant transactions are being
completed in the market at the time but need not to be
exactly identical to any of them, particularly if deal flow is
very limited or made up of unusual one-off deals. If there
are no relevant transactions during the survey period, a
hypothetical yield should be quoted, and is not a
calculation based on particular transactions, but it is an
expert opinion formed in the light of market conditions, but
the same criteria on building location and specification still
apply.
Alternative investment sectors – should be understood
as an alternative sectors to traditional sectors of
commercial assets (office, retail, hotels, industrial and
residential) where investors are willing to invest in search of
attractive yield. Alternative sectors could be identified as
self-storage, automotive/car parks, data centres,
infrastructure, leisure/entertainment, retirement living,
healthcare, real estate debt, student living etc. Real estate
debt is the segment that has the greatest existing market
penetration, however Student Housing is the segment
attracting most new interest.