Eastern European Properties Lacked Investment in 2009

Residential News » Residential Real Estate Edition | By Michael Gerrity | February 19, 2010 12:58 PM ET

(MOSCOW, RUSSIA) -- The volume of real estate investments in Central and Eastern Europe in 2009 amounted to EUR2.5 billion, which accounted for only 3.5% in the total European investment volume, said recently head of investment department of CB Richard Ellis (CBRE), the global leader in real estate services, Tim O'Sullivan.

According to O'Sullivan, Poland, Czech Republic, Slovakia and Hungary last year generated 55% of the total turnover of real estate investments in Central and Eastern Europe, compared with 35% in 2008.

He also added that the expected return on investment in Moscow real estate last year was 12%, compared to 9.5% in Bucharest, 8%, 7.5% in Hungary, 7%  in Bratislava and Prague, and 6.8% in the case of Warsaw. The expected return in Western Europe amounted to 6%.

According to CBRE's analysts, since the beginning of the recession real estate rents in the major Eastern European capitals such as Budapest, Prague, Bratislava and Bucharest fell by 10%, a sharp decrease was also observed in Warsaw and Moscow - 35% and 50% respectively.

According to its forecasts, the vacancy rate for investment property in the Eastern Europe will be reduced from its current level of 20% to 18% by the end of the year, while the balance between supply and demand will firstly to be established in Prague and Warsaw and then in Budapest.

CB Richard Ellis (CBRE) also said the turnover of real estate investments in Hungary in 2010 will increase to EUR400 million from EUR260 million in 2009.

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