CEE real estate market enters yield convergence and rising property values phase, Erste report shows

Newsroom 28/09/2010 | 14:31

A report put together by the Erste Group shows that the CEE property market is entering a new phase of yield convergence and rising property values, with takeovers still being an attractive options as financially sound companies remain interesting targets while others are being taken over for liquidation. This benefits mainly real estate investors rather then developers as vacancies are still high.

 “Analysis of CEE real estate markets shows that we will very likely enter a period of continuously rising property values. The development will clearly be led by yield compression. Given the pretty high vacancy rates across the region and the finalization of a number of development projects, a substantial property value increase due to rising rent levels is still unrealistic for the next 4-6 quarters ahead”, says Gunther Artner, Co-

Head CEE Equity Research.

One segment where the economic recovery is having a positive impact is the office one, where take-up is 38 percent y-o-y in the first half of this year, due to improved demand in both Western and Central-Eastern Europe. The vacancy rate remained at its pre-quarter level of 10.2 percent. However, the divergence in vacancy rates across Europe remains high, ranging from as low as 6.8 percent in Paris to levels above 15 percent in cities like Amsterdam, Dublin, Budapest and Moscow. The office segment recorded a further stabilization in rent levels, with some major cities even recording acceleration in rental growth on a quarterly basis. London West End (+13.3 percent), Paris (+7.1 percent) and London City (5.3 percent) saw the strongest increase in office rents. Demand for office space in CEE witnessed an increase by 36 percent y-o-y to 1.38mn sqm with by far strongest growth in Moscow, where take-up in the first half of this year nearly reached pre-2008 levels.

 

 

 

 

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