CEE office market turns the corner, says CBRE

Central and Eastern Europe (CEE) office investment turnover totalled over EUR 760 mln in the first half of 2010, a 310% increase on the EUR 185 mln recorded in H1 2009. The figures confirm views that the CEE office market has turned the corner, CB Richard Ellis said in a press release.

The latest data on the CEE market show that office investment remained highly concentrated in Poland and Russia in H1, which together accounted for almost 80% of the CEE office investment total.

H1 2010 office take-up in CEE increased by 36% compared to a year earlier and is up by 12% compared to H2 2009. The rebound in office demand was most significant in Moscow where take-up in H1 2010 has already surpassed the average for the period of 2005-2009.

While take-up in Central European (CE) countries has risen by 13% year-on-year, take-up in Southeastern Europe was up by 51%, reflecting the impact of the recession on these property markets. The level of new office development completions has decreased since 2008 and is expected to be almost 25% below 2009 levels.

This trend is likely to continue in 2011, with 1.7 million m² of office space planned for delivery and reflecting, amongst other factors, the difficulties in obtaining development finance. Annual completions in 2011 in CE are expected to be the lowest on record. Completions in SEE are also declining but are likely to surpass CE’s level next year for the first time in history. Limited development financing available continues to bake the development pipeline. From an investor point of view, a positive outcome of this is that the decreased pipeline is further improving the outlook for the occupier market, especially in CE in the medium-term.