EUR mln. Baltics Investment, 215 Highest investment volume in a decade EUR 1.97 billion 12 meur 7% 7% *Arrows indicate change from the previous year Figure 1: Investment Volume per Country 25-215 1 2 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 215 Latvia Estonia Lithuania Total Growth, % 5% 4% 3% 2% 1% % -1% -2% Growth, % KEY POINTS Since 1st of January 215 a currency risk has been removed as the euro was adopted across the Baltic countries The total investment volume for Baltic states in 215 was of EUR 1.1 billion, the figure has more than doubled when compared to 214. 215 s total volume was the highest since 27 Investors have changed their focus from 214 and in 215 invested in retail assets, investing almost EUR 64 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 US investors accounted for almost 2% of all Baltics investment volume in 215 Asking prime office and retail yield across the Baltics was showing slight compression in second half of 215, this trend will continue in 216 Due to very active office market and rapid development in this segment, the beginning of 216 shows that investors focus is on the office segment in Lithuania According to CBRE s 216 EMEA Investor Intentions Survey almost half (48%) of all respondents expect their purchasing activity to be higher than in 215, 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 216 215 CBRE Research 216 CBRE Real Estate Consultancy 1
EUR mln. Yearly Investment Volume (in Million EUR) BALTICS INVESTMENT M A CR OECONOM I C I NDI CA TOR S Figure 2: Real GDP Growth Forecasts per country (215-217), % 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1,,5, 215 216 217 Source: Source: Oxford Economics, 216 217 (forecast), March 216 I NV ESTM ENT A CTI V I TY IN 215 Figure 3: Share of the Baltics in the Total CEE Investment Volume (25-215) 18 16 14 12 1 8 6 4 2-18% Czech Republic Hungary Poland The Baltic States Romania Slovak Republic Russia BG, HR, UA, RS ESTONI A Figure 4: Investment Volume by Sector per Each Country, 215 5 4 3 2 1 79% 37% 72 % Latvia Estonia Lithuania Office Retail Industrial Mixed-Use Hotel Residential 215 CBRE Research 216 CBRE Real Estate Consultancy 2
BALTICS INVESTMENT LA TV I A Table 1: Newcomers in Baltic Countries during 215 Country Newcomers in 215 Latvia Estonia Lithuania LI THUA NI A Figure 5: Total Investment Volume distribution by Country, 215 Lithuania 24% Latvia 33% Estonia 43% BALTI C R EGI ON I NV ESTOR S P R OFI LE Figure 6: Investment Volume by Country of Origin, 2 13-214 18% 38% 2% 41% Baltic countries Scandinavia Western Europe Source: CBRE Research, 215 Figure 7: Investment Volume by Country of Origin in 215 18% 1% 8% 3% Western Europe Baltic countries 38% United States Scandinavia 24% Asia (China, Singapore) 215 CBRE Research 216 CBRE Real Estate Consultancy 3
EUR mln. BALTICS INVESTMENT Figure 5: Investment Volume by Sector in the Baltics (25-215) 1 2 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 215 Office Retail Industrial Mixed-Use Hotel Residential I NV ESTM ENT BY SECTOR Figure 6: Total Investment Distribution by Sector in the Baltics, 215 9% 5% % 7% 4% 16% Office Retail Industrial Mixed-Use Hotel 59% Residential Figure 7: Prime Office Yields compared with other CEE countries, 21-216f 11, YI ELDS 9, 7, 5, Q4 21 Q4 211 Q4 212 Q4 213 Q4 214 Q4 215 Q4 216f Czech Republic Hungary Latvia Estonia Lithuania Poland Romania Slovakia Figure 8: Prime Retail Shopping Centres Yield, 21-215 1, 9, 8, 7, 6, 5, Q4 21 Q4 211 Q4 212 Q4 213 Q4 214 Q2 215 Q3 215 Q4 215 Czech Republic Hungary Poland Romania Latvia Estonia Lithuania Slovakia 215 CBRE Research 216 CBRE Real Estate Consultancy 4
All CEE Countries Germany UK Spain Netherlands France Italy Nordics % of respondents BALTICS INVESTMENT Figure 9: Most Attractive Markets: In EMEA, which country/region do you believe to be the most attractive for making property investment purchases in 216? 4 213 214 215 216 3 2 1 Source: 216 CBRE Investor Intentions Survey, March 216 OUTLOOK FOR 216 Table 2: Top Ten Investment Transactions in the Baltic Countries, 215 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) 215 CBRE Research 216 CBRE Real Estate Consultancy 5
BALTICS INVESTMENT ABOUT CBR E IN BALTI CS Headquartered in Riga, Latvia from 211 Headcount 28 people Providing services in: Valuation, Consulting & Research, Property sales, Property & Asset Management, Tenant Representation, Agency Services Retail, Offices, Industrial & Logistics. RESEARCH DEFINITIONS CONTACTS 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. 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.