Frankfurt, Budapest and Prague top office commercial property market performance
The commercial property market in Prague is performing well despite the prevailing economic conditions but analysts warn that it is still considerably down on last year.
The experts also point out that the relatively good results for Prague, and others in central and Eastern Europe could be due to a delay in the full impact of the global finance crisis.
Office take-up in Prague reached 73 % of the average quarterly take-up of 2005 to 2008, according to a survey from property adviser DTZ. 'Of course, compared with the first three months of last year, which was a record year, this is a considerable decrease,' said Martijn Kanters, Head of Consulting & Research at DTZ.
'On the other hand, Prague and Central Europe have performed better than cities in Western Europe with the exception of Frankfurt,' he added.
Relatively good results from CEE can be explained by delayed effects of the economic crisis in this region, which will be reflected in the take-up results in the following quarters of 2009. Occupiers in Western Europe have been affected much earlier, the report says.
In Frankfurt take-up reached 140,500 m², which is 11% more than the local average in 2005 to 2008. This is however, caused by one transaction totalling 72,000 m² On the other hand, surprisingly Budapest is placed second and reached 91% of the four year average in the first quarter of 2009, it points out.
The city of London, conversely, was hitting its lowest level in 30 years in the first quarter of 2009. According to the survey the biggest drops have been recorded in the year on year comparison in Moscow, Dublin and Milan with falls of 90%, 79% and 74% respectively. In the comparison of the average of the last four years the worst placed are again Moscow, Rome, Dublin and Luxembourg.
The highest drops in rent were in Kiev and Moscow, where a drop of demand was connected also with the devaluation of the currency. The tenants are using lower rent and therefore the interest in the center of the city is increasing. Luxembourg, Rome, Paris CBD and Budapest have been stable until now, the report says.
DTZ analysts expect that occupier demand will decrease further in most of the cities during 2009. Rents are reacting to this tendency and an overall decrease of 5 to 15% is expected in 2009. In some locations such as Moscow, Kiev, Dublin and London the decrease will be well in excess