Czechs and Balance

Starskies2000 · Insider Anmeldungsdatum: 15.09.2003 Beiträge: 910 Wohnort: NRW

29 September 2004

The fifth CEDEM conference was held in Prague Sept. 23 and 24, dedicated to Central European real estate markets. The conference was organized by the Roberts Publishing Media Group active in Poland and the Czech Republic, the publisher of the Construction & Investment Journal.

The program of the conference comprised a series of thematic panels dedicated to individual sectors of the real estate market, including the development of retail-and-entertainment centers, urban planning, the construction investment market in the New Europe, office space and the development of the logistic/industrial sector. The last panel offered predictions for the development of the investment market in Russia and Eastern Europe. The conference was accompanied by workshops dedicated to investment management.

The conference attracted about 150 representatives of well-established companies on the Czech and Polish real estate markets, including law firms, investment companies, developers and financial institutions. Discussions chiefly surrounded the Czech Republic and Poland, creating the impression that these two countries were the leading real estate markets in this part of the continent. Hungary, which has been gaining top marks in the region, was mentioned only sporadically. Other countries in the region were only listed briefly during the last panel as a contrast for the positive changes that have taken place in Poland, the Czech Republic and Hungary.

The general tone of analyses involving the development of the real estate markets in Poland and the Czech Republic was optimistic. It was stressed repeatedly that despite the investment and changes made in Central Europe, there is still a lot of room for investment. The Polish retail center market provides a particularly exceptional picture. Poland and Russia have the largest number of investment projects in progress in this sector, and both these markets have the best prospects for further development. The potential of the Polish market is based on the considerable number of cities with a large population. However, drawbacks were also mentioned, including the failure of developers to lend an attractive character to such investments and the still-small share of entertainment facilities-an increasingly important factor in attracting customers-in the malls.

Even though attention was paid to the potential of smaller cities, chiefly in Poland, discussions largely focused on the capitals. Warsaw as the largest city in the region frequently appeared in the discussions, in both positive and negative contexts. Many words of criticism were uttered about urban planning in the Polish capital. Critics stressed the lack of proper transportation solutions as well as an organized city center, which discourages people from staying in central areas of Warsaw. Still, John Banka, a representative of Colliers International, noted the efforts of the current administration in the capital to restore order in Warsaw.

On the other hand, the development of the Warsaw office space market was rated positively. In this area, Warsaw is perceived as the most spontaneously developing market. According to predictions, rents in the Polish capital-which currently exceed 20 euros in the best locations-will fall. Participants also noted the potential of small cities, illustrated by the move of the headquarters of large corporations to office centers in various cities in Czech Republic, Poland and Hungary. Even though capitals still attract the most attention, a growing number of companies are opening their office centers in cities such as Łódź and Poznań. Poland is of major importance on this market due to a large number of cities with a well-developed infrastructure and many academic centers, something that is unavailable in other countries in the region.

The logistics panel focused on whether countries in Central Europe have a chance to become the logistic megacenter of Europe and consequently act as a gateway for companies transporting goods to the former Soviet Union. In this area, Poland, the Czech Republic and Slovakia count the most. These countries still have untapped potential and plans by the European Union to create large north-west and east-west transport corridors embrace these opportunities. The development of this market and its possibilities will be determined by investment in infrastructure and the situation in Russia. The next three to five years will be pivotal in demonstrating whether this country will try to shut itself off from the West or continue down the path of democracy.

The Polish and Czech investment markets, according to analysts, look stable and may still expect a major influx of capital. According to predictions, the high rate of capitalization currently noted in Central European markets may fall to 7 percent, though according to some experts, the rate of return may reach 9 percent for part of the market (about 20 percent). The market was described as promising; the key issue for its development is GDP growth as well as the profitability of investment.

The last panel analyzed the situation in Romania and Bulgaria as well as Russia and Ukraine. This final part of the conference yielded indirect answers to questions about the reasons behind successes on real estate markets in Poland, the Czech Republic and Hungary. Conference participants stressed the efforts made by these three countries in developing a free market and combating corruption, which is still a problem in other countries in the region.
Norbert Piwowarczyk
Prague