Uneven Recovery Seen in Central, Eastern Europe

Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

WARSAW-Particularly in the major CEE economies of Romania, Hungary, Prague and Poland, new evidence suggests that what began as a relatively simultaneous economic downturn may become a very uneven recovery, with some economies – especially Poland – proving more resilient, realtor Jones Lang LaSalle says.

Its latest CEE City Report sees Poland achieving positive GDP growth during 2009, with the Czech Republic following in mid-2010 and Romania and Hungary towards end-2010. Despite the lack of transactional evidence, JLL sees prime yields moved out on average 160 basis points in Prague and Warsaw, 220 basis points in Budapest and 260 basis points in Bucharest since Q2 2008. Additional readjustments are still likely through year-end. First-half investment volumes across the Czech Republic, Hungary, Poland and Romania remained very low at €430 million, down 84% from a year earlier. With only one deal above €100 million, the average in 1H09 was below €25 million, attributed to the lack of available debt and the misalignment in pricing expectations between buyers and vendors.