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February 2012
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Content
1. CEE Property Investment
2. CEE Yields, Capital Values
3. CEE Economy
4. CEE Office Occupier Market
5. CEE Retail Market Overview
6. CEE Logistics Occupier Market
1.
CEE Property Investment
Property Investment Market Turnover in CEE
...with much stronger recovery still visible in CEE
CE
EE
SEE
CEE average
CEE Turnover as % of EMEA turnover
5000
12%
4500
10%
4000
8%
Qrt Avg 2006-2008: €3.0 bn
€ million
3000
2500
6%
2000
4%
1500
1000
2%
500
0
Source: CBRE (Q3 2011 figures through end of August 2011).
CBRE | Page 5
Q4 2011
Q3 2011
Q2 2011
Q1 2011
Q4 2010
Q3 2010
Q2 2010
Q1 2010
Q4 2009
Q3 2009
Q2 2009
Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
Q4 2007
Q3 2007
Q2 2007
Q1 2007
Q4 2006
Q3 2006
Q2 2006
Q1 2006
0%
CEE share in EMEA volume
3500
CEE Property Investment by Country
2008 Total Size € 9.5 Billion
2%
2011 Total Size € 11.2 Billion
2%
3%
3%
9%
1%
4%
19%
Bulgaria
Croatia
12%
Czech Republic
Hungary
31%
Poland
4%
6%
40%
Romania
Russia
Serbia
Slovakia
Ukraine
21%
28%
12%
3%
Source: CBRE (January 2012).
CBRE | Page 6
CEE Investment Turnover by Sub-Region - Office
Bulgaria
Croatia
Czech Republic
Hungary
Poland
Romania
Russia
Serbia
Slovakia
Ukraine
3500
3000
million EUR
2500
2000
1500
1000
500
0
2006 H1
2006 H2
Source: CBRE (January 2012).
CBRE | Page 7
2007 H1
2007 H2
2008 H1
2008 H2
2009 H1
2009 H2
2010 H1
2011 H1
2011 H2
CEE Investment Turnover by Sub-Region – Retail
Ukraine
Slovakia
Serbia
Russia
Romania
Poland
Hungary
Czech Republic
Croatia
Bulgaria
3500
3000
million EUR
2500
2000
1500
1000
500
0
2006 H1
2006 H2
Source: CBRE (January 2012).
CBRE | Page 8
2007 H1
2007 H2
2008 H1
2008 H2
2009 H1
2009 H2
2010 H1
2010 H2
2011 H1
2011 H2
2.
CEE Yields, Capital Values
CEE Prime Office Capital Value Movement
70%
CEE Yield Effect
CEE Rent Effect
CEE Capital Value Change (y-o-y)
60%
50%
capital value change % (y-o-y)
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
Source: CBRE (January 2012).
CBRE | Page 10
Q4 2011
Q2 2011
Q4 2010
Q2 2010
Q4 2009
Q2 2009
Q4 2008
Q2 2008
Q4 2007
Q2 2007
Q4 2006
Q2 2006
Q4 2005
Q2 2005
Q4 2004
Q2 2004
Q4 2003
Q2 2003
Q4 2002
Q2 2002
Q4 2001
Q2 2001
-70%
Office Capital Values
Still room for improvement prime CVs in some CEE markets compared to peak of the market
Capital Values in Q1 2008
Capital Values in Q4 2011
20000
18000
16000
14000
EUR/ sq m
12000
10000
8000
6000
4000
2000
Source: CBRE (January 2012).
CBRE | Page 11
Belgrade
Sofia
Istanbul
Zagreb
Bratislava
Bucharest
Lisbon
Budapest
Prague
Brussels
Vienna
Hamburg
Athens
Kyiv
Amsterdam
Warsaw
Munich
St Petersburg
Frankfurt am Main
Geneva
Madrid
Zurich
Moscow
London - City
Dublin
Paris
London - West End
0
German Government Bond vs. Prime Office Yields
Yield gap prime Central European property as interesting as last seen in 2003/2004 !
Q2 ‘03 –
530 bps
Prime yields in Q4 2011
Warsaw: 6.25%
Prague: 6.50%
Bratislava: 7.25%
Budapest: 7.25%
Real Estate Risk Premium Central Europe
Real Estate Risk Premium EU-15
“Risk-Free” Rate
Source: Reuters, CBRE (January 2012).
CBRE | Page 12
Q2 ‘07105 bps
Q2 ‘11
Q4 ‘11
362 bps
475 bps
CEE Weighted Average Prime Office Yields (%)
20
18
CE Weighted Average Prime Yield
SEE Weighted Average Prime Yield
EE Weighted Average Prime Yield
CEE Weighted Average Prime Yield
prime yield (%)
16
14
12
10
8
6
Source: CBRE (January 2012).
CBRE | Page 13
Q4 2011
Q2 2011
Q4 2010
Q2 2010
Q4 2009
Q2 2009
Q4 2008
Q2 2008
Q4 2007
Q2 2007
Q4 2006
Q2 2006
Q4 2005
Q2 2005
Q4 2004
Q2 2004
Q4 2003
Q2 2003
Q4 2002
Q2 2002
Q4 2001
Q2 2001
4
Source: CBRE
CBRE | Page 14
Prague
Budapest
Warsaw
Bucharest
Moscow
Belgrade
Bratislava
Kyiv
Q4 2011
Zagreb
Q3 2011
Sofia
Q2 2011
Q1 2011
Q4 2010
Q3 2010
Q2 2010
Q1 2010
Q4 2009
Q3 2009
Q2 2009
Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
Q4 2007
Q3 2007
Q2 2007
Q1 2007
Q4 2006
Q3 2006
Q2 2006
Q1 2006
Initial Yield (%)
CEE Prime Yields - Office
16
14
12
10
8
6
4
Source: CBRE
CBRE | Page 15
Prague
Budapest
Warsaw
Bucharest
Moscow
Belgrade
Bratislava
Kyiv
Q4 2011
Zagreb
Q3 2011
Sofia
Q2 2011
Q1 2011
Q4 2010
Q3 2010
Q2 2010
Q1 2010
Q4 2009
Q3 2009
Q2 2009
Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
Q4 2007
Q3 2007
Q2 2007
Q1 2007
Q4 2006
Q3 2006
Q2 2006
Q1 2006
Initial Yield (%)
CEE Prime Yields - Retail
18
16
14
12
10
8
6
4
Source: CBRE
CBRE | Page 16
Prague
Budapest
Warsaw
Bucharest
Moscow
Belgrade
Bratislava
Kyiv
Q4 2011
Zagreb
Q3 2011
Sofia
Q2 2011
Q1 2011
Q4 2010
Q3 2010
Q2 2010
Q1 2010
Q4 2009
Q3 2009
Q2 2009
Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
Q4 2007
Q3 2007
Q2 2007
Q1 2007
Q4 2006
Q3 2006
Q2 2006
Q1 2006
Initial Yield (%)
CEE Prime Yields - Industrial
18
16
14
12
10
8
6
4
3.
CEE Economy
CBRE | Page 18
Source: Oxford Economics (December 2011).
France
UK
Germany
Eurozone
2011
Slovak Republic
Romania
Poland
Hungary
Czech Republic
Annual Real GDP Growth (%)
GDP Outlook
6
2012 forecast
5
4
3
2
1
0
-1
-2
-3
GDP Outlook
Significant downside risks to growth exist in CZ, SK and RO as “2009” has shown
2009
2011
2012 forecast
2013 forecast
6
5
4
3
Annual Real GDP Growth (%)
2
1
0
-1
-2
-3
-4
-5
-6
-7
Source: Oxford Economics (December 2011).
CBRE | Page 19
France
United Kingdom
Germany
Eurozone
Slovak Republic
Romania
Poland
Hungary
Czech Republic
-8
1/2/1999
1/5/1999
1/8/1999
1/11/1999
1/2/2000
1/5/2000
1/8/2000
1/11/2000
1/2/2001
1/5/2001
1/8/2001
1/11/2001
1/2/2002
1/5/2002
1/8/2002
1/11/2002
1/2/2003
1/5/2003
1/8/2003
1/11/2003
1/2/2004
1/5/2004
1/8/2004
1/11/2004
1/2/2005
1/5/2005
1/8/2005
1/11/2005
1/2/2006
1/5/2006
1/8/2006
1/11/2006
1/2/2007
1/5/2007
1/8/2007
1/11/2007
1/2/2008
1/5/2008
1/8/2008
1/11/2008
1/2/2009
1/5/2009
1/8/2009
1/11/2009
1/2/2010
1/5/2010
1/8/2010
1/11/2010
1/2/2011
1/5/2011
1/8/2011
1/11/2011
In %
10 Year Government Bond Yields
... especially for Hungary this is resulting in dangerous spreads
CBRE| Page 20
Czech Republic, Macrobond, 10 Year
Hungary, Eurostat, Government Bond, 10 Year
Poland, Eurostat, Government Bond, 10 Year
Romania, Eurostat, Government Bond, 10 Year
Slovakia, Eurostat, Government Bond, 10 Year
14
12
10
8
6
4
2
0
Sources: Eurostat / Macrobond (January 2012)
CEE Unemployment Rates / Average Monthly Wage
Unemployment rates only slowly going down in most markets
2010
2011(e)
2012(f)
Average Monthly Nominal Wage
16%
1200
14%
1000
800
10%
8%
600
6%
400
4%
200
2%
0%
0
Bulgaria
Croatia
Czech Republic
Hungary
Poland
Romania
Russia
Source: UniCredit Group, CEE Quarterly Q1/2012(2011 data estimated, 2012 data forecast).
CBRE| Page 21
Slovakia
Ukraine
Euro / month
Unemployment Rate (%)
12%
Gross Government Debt
… since debt levels increased across the board
2005 Gross Government Debt
2010 Gross Government Debt
2010 Eurozone
Maastricht Criterion
145%
120
100
% of GDP
80
60
40
20
Sources: Eurostat (based on last update from 20.12.2011). Eurozone average unweighted. *Bulgaria’s
gross debt decreased since 2005.
CBRE| Page 22
Greece
Italy
Belgium
Ireland
Portugal
France
Hungary
Germany
UK
Austria
Poland
Latvia
Slovakia
Czech
Republic
Lithuania
Romania
*Bulgaria
Estonia
0
Budget Deficits across Europe
State finances slowly improving, however, further fiscal consolidation needed
2005
2006
2007
2008
2009
2010
Maastricht Criterion
5
CEE
In % of GDP
0
-5
-10
Source: Eurostat (May 2011).
CBRE| Page 23
Greece
Ireland
United Kingdom
Spain
Portugal
Romania
Slovakia
Poland
Czech Republic
Bulgaria
Hungary
Austria
Germany
Estonia
Sweden
-15
CEE Retail Trade Turnover
Generally consumer spending is not really picking up yet; PL continues outperformance
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
15
10
% Year-on-Year Change
5
0
-5
-10
-15
-20
Bulgaria
Croatia
Source: Eurostat (May 2011).
CBRE| Page 24
Czech
Republic
Hungary
Poland
Romania
Slovakia
United
Kingdom
Germany
Greece
4.
CEE Office Occupier Market
CEE Take-up by City
Belgrade
Budapest
Warsaw
Bratislava
Prague
Zagreb
Bucharest
Sofia
CEE Half-Year Average (2004-2008)
900
750
-30%
-21%
600
Thousand sq m
-22%
450
300
150
0
2001
H1
2001
H2
2002
H1
2002
H2
2003
H1
2003
H2
2004
H1
2004
H2
2005
H1
2005
H2
2006
H1
2006
H2
2007
H1
2007
H2
2008
H1
Source: CBRE (January 2012). Does not include lease renewals. Excludes Eastern Europe .
CBRE | Page 26
2008
H2
2009
H1
2009
H2
2010
H1
2010
H2
2011
H2
Development vs Net Absorption & Vacancy
Net Absorption - Moscow
Net Absorption (excl. EE)
Development Completions - Moscow
Development Completions (excl. EE)
CEE Vacancy Rate
CEE Vacancy Rate (excl. EE)
2000
18
16
14
12
1200
10
8
800
6
4
400
2
0
0
2006 H1
2006 H2
2007 H1
Source: CBRE (January 2012).
CBRE | Page 27
2007 H2
2008 H1
2008 H2
2009 H1
2009 H2
2010 H1
2010 H2
2011 H1
2011 H2
Vacancy Rate (%)
thousand sq m
1600
CEE Office Deliveries and Pipeline (U/C)
Lack of financing affecting pipeline U/C
Source: CBRE (January 2012).
CBRE | Page 28
CEE Vacancy v Pipeline
Most markets above 10% vacancy; pipeline U/C low and/or declining
Current Vacancy
“HIGH” Vacancy
“HIGH” Pipeline
“LOW” Vacancy
“LOW” Pipeline
Source: CBRE (January 2012).
CBRE | Page 29
EMEA Office Market Rent Cycles: Q4 2011
As of 31st December 2011
Amsterdam
London City
Berlin
Zurich
Helsinki
Paris
London WE
Brussels
Rotterdam
Athens
Oslo
Birmingham
Copenhagen
Bucharest
Budapest
Moscow
Munich
Vienna
Warsaw
Geneva
Edinburgh
Manchester
Barcelona
Dublin
Madrid
Frankfurt
Hamburg
Lisbon
Dusseldorf
Milan
Prague
Rome
NB. Markets do not necessarily move along the curve in the same direction or at the same speed.
The rental cycle is intended to display the trend in net effective rents.
Source: CBRE
CBRE | Page 30
Stockholm
Relationship Prime Rent and Vacancy
Most markets still tenant friendly; Warsaw being exception
Prime rents Moscow
Current: Euro 923 per sqm / year
From trough: +41%
Source: CBRE (January 2012). Vacancy levels and prime rents at every quarter end since Q1 2008
through Q4 2011.
CBRE | Page 31
5.
CEE Retail Market Overview
Retail density vs GDP per capita
300
Czech republic
Croatia
Retail Density (sq m/1000 inhabitants)
250
Poland
Slovakia
Hungary
200
150
Romania
100
Serbia
50
0
0
2,000
4,000
6,000
8,000
GDP per capita (EUR)
Source: CBRE (January 2012)
CBRE | Page 33
10,000
12,000
14,000
16,000
CEE Shopping Centre Stock and Pipeline (U/C)
Poland clearly largest market with 9 mn sqm stock – Romania quickly catching up with Czech
Existing SC Stock
Pipeline SC Stock (U/C)
Poland
Moscow
Czech R.
Romania
St. Petersburg
Hungary
Slovakia
Croatia
Ukraine
Serbia
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
sq m
Source: CBRE (January 2012).
CBRE | Page 34
6,000,000
7,000,000
8,000,000
9,000,000 10,000,000
CEE Retail Trade Turnover
Especially SEE took big hit on consumer spending; PL outperforming
Source: Eurostat (February 2012).
CBRE | Page 35
Retail Density in CEE Cities
Expected Retail Provision Rate by 2012
1,200
2,400
1,000
2,000
800
1,600
600
1,200
400
800
200
400
Kosice
Nis
Gdynia
Brasov
Bialystok
Galati
Craiova
Constanta
Ostrava
Katowice
Timisoara
Iasi
Cluj Napoca
Varna
Lublin
Bydgoszcz
Brno
Szczecin
Bratislava
Gdansk
Poznan
Wroclaw
Lodz
Krakow
Zagreb
Belgrade
Prague
Budapest
Warszawa
Bucharest
Kiev
Saint Petersburg
0
Moscow
0
‘000 inhabitants
sq m / ‘000 inhabitants
Current Retail Provison Rate
Source: CB Richard Ellis, National census (May 2011). Densities not necessarily representing actual catchment of cities /
schemes. Densities calculated based on administrative borders and are provided as an indication only!
CBRE | Page 36
CEE Shopping Centre Prime Rents
Sofia
Prague
Budapest
Warsaw
Bucharest
Belgrade
Bratislava
140
130
Prime Rent (Euro per month)
120
110
100
90
80
70
60
50
40
30
Sources: CBRE (February 2012). Base rent only – no turnover rent included.
CBRE | Page 37
Q4 2011
Q3 2011
Q2 2011
Q1 2011
Q4 2010
Q3 2010
Q2 2010
Q1 2010
Q4 2009
Q3 2009
Q2 2009
Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
Q4 2007
Q3 2007
Q2 2007
Q1 2007
20
CEE Slide Bank
January 2012
With queries and comments please contact us:
Eva Sindelarova
Jos Tromp