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South African investors target Central and Eastern Europe, says JLL

South African investors target Central and Eastern Europe, says JLL

June 2016

South African investors have made their mark on the real estate industry across Central and Eastern Europe (CEE) in the last 12 months, according to JLL, with the region’s attractive yields and low interest rates enticing an increasing flow of capital.

South Africa’s major REITs and property companies, which have traditionally favoured domestic real estate deals, are looking to CEE to satisfy their appetite for quality yield enhancing assets.

“The attractive risk-reward profile, limited competition and lower funding costs offered by CEE markets are making it an enticing investment destination compared to markets like the UK, where competition is high for prime assets, and South Africa’s domestic market, where the cost of debt funding is currently higher than property yields for prime assets,” says Craig Smith, Associate Director, Sub-Saharan Africa Capital Markets, JLL.

Retail has outperformed other asset classes in South Africa and this preference is translating into investors’ strategies in Central and Eastern Europe.

South African REIT Hyprop recently entered Serbia and Montenegro as part of a joint venture with Homestead to acquire two Delta City shopping centres for a total of EUR 202.7 million, the largest single asset deal in South Eastern Europe for five years.

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