Compared to the previous quarter, the volume of investments increased in all key commercial real estate sectors. The industrial sector was the most active for the second consecutive quarter, with real estate sold reaching more than € 286 million in the fourth quarter, representing 46% of all investments made in the last quarter of 2021 and the highest quarterly result recorded in any sector since the fourth quarter of 2018. also increased in offices where the value of investments exceeded EUR 221 million, ie 35% of the quarterly volume.
This was the highest quarterly volume of office investment recorded in 2021. From a year-on-year perspective, investment activity shifted significantly from offices, where the value of investments fell by 31% compared to Q4 2020, to the industrial sector, which, on the other hand, showed an increase in investment by 521% compared to Q4 2020. Retail space accounted for 16% of transactions in the fourth quarter of 2021, reaching a total value of EUR 97 million.
Lenka Pechová, senior research analyst spol. Savills CR and SR, says: “The volume of investments in commercial real estate in 2021 totaled EUR 1.67 billion. Although this is a 39% year-on-year decrease, if we deduct the Residomo transaction from the investments in 2020, it would be a 17% increase. Compared to the pre-pandemic year of 2019, the annual volume of investments is 45% lower. "
Due to high demand in the industrial sector, the yield on first-class real estate decreased by 25 basis points to 4.00%. For the first time in history, revenues from industrial and office real estate are converging, as evidenced by the importance and demand in the industrial sector, which is benefiting from the paradigm shift during the pandemic. There was also a slight decrease in revenues from first-class office buildings, by 10 basis points to 4.00%. Revenues from residential and retail properties remained unchanged from the previous quarter: the most successful shopping centers were around 5.75%, premium business units at 4.50% and quality residential properties at 4.00%.
Of the 30 transactions carried out in the fourth quarter of 2021, 13 were industrial real estate, 9 were in the retail sector, mainly in regional cities, and 6 were in Prague office buildings. The average transaction size decreased again in the fourth quarter, from the previous EUR 23 million to EUR 21 million, while in the years 2018-2019 the quarterly average was EUR 40.5 million. It is also worth noting that in 2021 no transaction was concluded in excess of EUR 100 million.
Domestic investors accounted for 50% of the total investment in the fourth quarter, spending a total of over EUR 314 million and buying 21 properties. The largest volume of foreign capital in the fourth quarter came from the USA. Domestic investors were among the main group of buyers throughout 2021, acquiring a total of more than EUR 778 million, which corresponds to 47% of the annual volume. The second most active group were investors from Europe with a 25% market share.
Fraser Watson, Director of Investment Advisory, spol. Savills CR and SR comment: “Although investment volumes have not yet reached pre-pandemic levels, the number of transactions increases with each quarter. The total number of transactions showed a positive increase, with 72 transactions being recorded for the whole of 2021, which is 46% more than a year ago and at the same time a similar number, which was common even before the pandemic. Given the properties that are expected to change owners in the next 12 months, we expect the results of 2022 to be slightly more positive again, with the total annual investment likely to exceed € 2 billion. The industrial and logistics sector continues to enjoy great investor interest, and this momentum will undoubtedly continue in 2022. "