Commercial real estate investment volumes in Central and Eastern Europe reached €7bn in the first half of 2017, 6% less than the same period last year, but the full-year total will surpass €17bn, topping 2016’s figure, according to a report by real estate firm Cushman & Wakefield.

More than half of the investment was in retail, targeting the ongoing consumer boom across the region, driven by falling unemployment and rising wages. The top three deals in H1 were all in the retail sector.

The office sector investment volume was weaker than in previous years, but Cushman & Wakefield predict that it will recover in the second half and outperform the retail segment, reflecting rises in employment. This should benefit in particular the Warsaw office market.

The Czech Republic was the stand-out performer in H1 with €2.2bn in investment, ahead of Russia with €1.6bn and Poland with €1.1bn. The Czech Republic led in retail and office investments with €1.02bn and €590mn respectively, while Hungary led in the warehouse sector with €305mn.

The consumer boom in Poland should drive volumes there going forward, while the Russian real estate market will start its recovery. “While in Russia the consumer market is still suffering from crisis, investors are taking advantage of lower real estate prices in the view of an expected economic recovery in 2018,” according to the report.

Further down the list of countries in the report (which also includes Slovakia and Turkey), both Hungary and Romania, with €0.9bn and  €0.7bn respectively, are expected to outperform the leaders in their growth rates this year.

European investors dominate the CEE commercial real estate investment market with a 46% share, the highest since 2010, while domestic investors continued their five-year long fall back to 35%, and 19% of investment volume came from non-European players.

James Chapman, international partner, CEE capital markets, highlighted the growth in Asia-Pacific investments, particularly from China and tipped Australia as a future significant investor. Landmark investments so far this year have included purchases by China’s CEFC in Prague, Singapore wealth fund GIC’s €2bn acquisition of the P3 logistics platform in the region, and CIC of China’s deal to buy Logicor, which includes €1bn in CEE.

“2017 will be seen as a year of mega deals leading to record investment volumes,” Chapman predicts. “In Poland, the Logicor, Ikea and CBRE GI deals will be followed by the c.€1bn Metro retail portfolio changing hands, whilst there are also large deals in the office and logistics sectors also underway.”