Declining prices - rising yields

For many years RegioData Research has been conducting research on the real estate markets in CEE. Including all asset classes such as office, retail, logistics, commerce and hotels.

And for the first time the current development shows some form of disruptions and trends do no longer continue. The key to this was the year 2008. As an example the office market in all CEE cities showed a strong yield compression over the last years. When the current crisis hit, this trend has suddenly changed. The yields for office space in Praha dropped from 9% in 2001 to a meagre 5,6% in 2007 at a decreasing rate. 2008 already showd gross yields up to 5,8% and in 2009 yields above 6% are likely.

This trend is especially strong in those cities, that showed a very high yield compression over the last years. In some cities the yields were even below that of comparable projects in Western Europe. Although there is still a higher risk involved with projects in CEE.

Mr. Wolfgang Richter (CEO RegioData Research) states: “Based on the current data this trend can be seen in about 80% of the CEE cities that are monitored by RD.”

The lower property prices and lower valuations lead to higher yields and this beneficial process calmes the overheated market. Therefore the ratio between East and West is in balance once again.

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