Across Central and Eastern European markets vacancy is on the up, rents are stalling or falling and new supply is being mothballed on the back of weak markets and reduced availability of development finance. The extent to which this is happening differs markedly by country and market sector.
- At the end of 2008, the total office stock in Prague exceeded 2.4 million m² as 332,000 m² of new supply were delivered since the beginning of the year. By the end of 2008, the vacancy rate had reached 9% compared to around 6% at the end of 2007.
- In Hungary, the total area of speculative and built-to-suit industrial property came to 1,376,000 m² at the end of 2008, of which 940,000 m² was speculative and 436,000 m² was built-to-suit. Of this, 234,000 m² was vacant (17.0%). Year-end 2005-2007 vacancy figures were between 912%.
- The total volume of modern retail space in Poland is approaching 6.7 million m². Just over 500,000 m² of leasable area in new projects were developed in 2008. The trend of developers directing their interest towards smaller cities continued in 2008.
- The stock of industrial space in Bucharest and its immediate surroundings increased by 42% in 2008, taking the total stock to 880,000 m². Total deliveries amounted to 350,000 m² in 2008 compared to 45,000 m² in 2007.
- In 2008 the total number of hotel rooms in Moscow grew by ca. 3%. Around 1,000 new rooms entered the market, which is 50% less than was announced in 2007. In 2009 we expect a supply increase of 2.53%, mainly in the four- and five-star hotel segment, meaning that the upscale segment will reach its saturation point.
- By the end of 2008 the total stock of modern office space in Bratislava was 1,162,370 m², of which 93,034 m² (60%) was Class A. Almost 135,000 m² of Class A office space was introduced to the market, increasing Class A stock by 25%. The collective result of so much new space led to the vacancy rate increasing from 6% to almost 9% as all new space was not let.
- In Ukraine, a sharp decrease in demand along with new office supply coming into the market, a mass-refusal of pre-let agreements and an increasing number of sublease offers in 4Q resulted in a vacancy rate at the end of 2008 up to 17.017.5%. This is a significant increase compared to the 2% vacancy registered at the beginning of the year.
These are just a few of the market facts found in the recently released Colliers 2009 Real Estate Review of Central and Eastern Europe. Covering the Czech Republic, Hungary, Poland, Romania and Slovakia, as well as Russia and Ukraine, the report provides facts, figures and analysis of sales transactions, new development projects and investment activity, as well as occupancy and rental rates in the office, retail, logistics and lodging sectors. Case studies of significant transactions are presented to illustrate activity in the region. In addition, legal and tax overviews are provided for each country.
"The CEE countries are now feeling the effects of the worldwide recession," says Damian Harrington, Colliers International regional research director, New Europe. "But it's important to remember that the region is not monolithic. Each country has its own strengths and weaknesses. All CEE countries will bounce back as the general economy improves, some sooner than others. The implications for occupier markets and thus real estate investment pricing in the meantime are significant. This overview will help anyone involved in commercial real estate in the region better understand what is happening and more importantly, what we at Colliers International expect to happen."