Jones Lang LaSalle presents its next edition of quarterly market reports - CEE City Reports Q3 2009. The CEE City Reports cover the main trends in the economy and demand and supply in the investment, office, retail, industrial, hotels and residential markets.
John Duckworth, Managing Director of Jones Lang LaSalle in the CEE comments: "As the world enters economic recovery and banking systems mend, real estate markets are doing their own healing, but at markedly different paces. In Europe, improving investor sentiment is driving activity for a specific band of prime real estate. Development pipelines continue to shrink or slip as financing remains difficult to obtain or is still currently too expensive to make sense. Occupier activity across all sectors has slowed compared to previous years as similar financing issues prevent or delay relocation and expansion plans. Rental levels are beginning to bottom out in most of the core CEE markets and we expect stability to fully return throughout 2010 once the supply and demand levels rebalance."
Poland is still forecast to be one of the few, if not the only country in Europe, to have positive GDP growth during 2009, with the Czech Republic following in mid-2010. Romania and Hungary are forecast to follow towards the end of 2010. These green shoots of recovery in the economy will still take some time to filter into the real estate markets however, forecasts also suggest that the core CEE4 countries will gather momentum in 2011 and register average year-on-year growth of over 3% which is somewhat higher than the EU-15 forecast of 1%.
Total investment volume across Central and Eastern Europe (CEE) amounted to only 6.2 billion in 2008 compared to a volume of almost double in 2007 (11.7 billion) and similarly in 2006 (10.1 billion). We believe that the lack of liquidity and the fall in positive sentiment that has affected CEE over the past 12 months, does now appear to be slowly changing. We have noticed a return of investors to CEE with several transactions taking place in the office, retail, logistics and hotels sector accounting for approximately 991 million to date in 2009.
Leasing market conditions are currently in favor of occupiers across most sectors. Many occupiers have had to delay or cancel relocation or expansion plans as a result of the crisis. Despite the recent positive news in the global economy, this will still take some period of time to work through into actual business confidence. As the development pipeline continues to remain low again across all sectors, we expect a shift in balance from an occupiers market to a more balanced market in the second half of 2010 and then into a landlord's market as we go through 2011.