Central European office markets set to outperform.

Several Central European (CE) office markets are well placed to show above-average occupational market performance in the short- to medium-term, not only compared to their Central and Eastern European (CEE) neighbours, but also compared to several EU-15 markets, according to CB Richard Ellis. Core office properties in markets such as Poland and Czech Republic have the potential to offer income-generating characteristics at relatively low risk levels, and at prices that are significantly more sustainable than one year ago, presenting interesting opportunities for investors to (re-)enter these CEE property markets, CBRE says in its forthcoming research, Risk, Return & Reality - CEE Office Property.The broker says negative sentiment surrounding CEE and a widespread perception that CEE markets are uniform in terms of property market risks have contributed to significantly lower property investment volume so far in 2009. Such sentiment is justified with regard to certain parts of the region, the report says, while other parts of CEE have been unfairly swept up by it. CEE economies are not yet out of the woods, but recent forecasts are more positive for 2010 and 2011. Jos Tromp, Head of CEE Research, explains: 'All CEE economies have been affected by the downturn, but the impact has not been uniform. Poland, for example, is still forecast to record positive economic growth in 2009, which would make it one of only a few European countries to do so. 'Moreover, prospects for recovery in 2010/11 are generally seen as better in CEE than Western Europe. The IMF recently forecast economic growth of 3.7% and 2.2% in Slovakia and Poland respectively in 2010, well above forecast growth of 0.3% in the Eurozone. Even hard-hit economies such as Ukraine and Russia are expected to see positive economic growth in 2010. This would have positive effects on office markets across the region, including easing upward pressure on unemployment and limiting further downward pressure on rents.'
Source: Property EU, november 2009