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Estonia's Eften invests EUR 140 mln in commercial real estate in 2016

BC, Tallinn, 01.12.2016.Print version
Estonian commercial real estate fund manager Eften Capital in 2016 invested 140 million euros in commercial properties, reports LETA/BNS.

"While 2015 saw us invest a total of 110 mln euros into five commercial buildings, then this year we made six investments with a total value of 140 mln euros," it is written on the company's home page.


"More than one half of the investment volume constituted the purchase of the Domina shopping centre in Riga. The transaction value of Domina was 74.5 mln million. The seller was KanAm Grund, who acquired the center in 2006 from Pro Kapital for 152 mln euros," it is written on the home page.


Furthermore, Eften Real Estate Fund III acquired in sales and leaseback transaction three logistics centers in Tallinn, Riga and Vilnius, which are leased by the DSV Group. Eften Kinnisvarafond II AS acquired the Magistral shopping centre in Mustamae, Tallinn, from Citycon.


In the last transaction of the year, Eften Real Estate Fund III acquired the office building L3, in Vilnius, where the seller was E.L.L. Kinnisvara.


According to Colliers International, the total volume of commercial property investments in the Baltics this year will be 1.17 bln euros, which gives Eften Capital a 12% market share and first place in terms of volume in the Baltics.


"In terms of a wider market outlook, we are more pessimistic than many of our competitors. Specifically, we consider the yields of Baltic commercial real estate markets to be low, for example, compared to other capital cities in Central and Eastern Europe. The competitive advantage that has existed for years, where the returns of the Baltic commercial real estate market were up to 3-4 percent higher, no longer really applies," Eften said.


"This is a seller's market, where the interest and actual capacity to invest exceeds the number of investment-worthy properties. In terms of new investments we are maintaining a conservative position, since we consider the overall price level of the market to be high," the company said.


Financial models of commercial property investments are built on the assumption that the rents increase in line with inflation. "If after a period of several years we now have reason to expect inflation to increase in 2017, then the same prediction cannot be made for rent. New supply, currently under construction, will be added in each commercial property segment and in each capital of the Baltic states. Accordingly, the rent prices are moving sideways and the pressure is rather on increased vacancy and overall reduction of rent levels," Eften said.

As at year's end Eften Capital manages 46 commercial buildings with a market value of 500 mln euros and with more than 900 tenants. Eften Capital is the largest management company for commercial real estate in the Baltic states.






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