Colliers International, leading international real estate consultancy
company, whose Slovak branch is a member of Bratislava Research Forum (BRF), has
focused on 12 markets, referred to as “New Europe region“. Albania,
Bulgaria, Croatia, Czech Republic, Greece, Hungary, Poland, Romania, Russia,
Serbia, Slovakia and Ukraine were subjected to mapping which resulted in a
summary of all commercial real estate sectors in the said countries in 2010 as
well as predictions regarding trends projected for 2011.
Well, we are clear (until the next change). The original government plan, to
tax newly sold flats from development project with basic 20 % VAT rate from 1st
January next year (or even from 1st October of this year) has eventually (?)
softened. There will be a certain “step-by-step“ progress in the form of 14
% VAT next year and 17.5 % VAT from 2013. To what extent will this decision
affect further development of new flats construction as well as trading
older flats?
The quantity, or the space, of superior quality offices in Prague has
significantly grown during the past decade. At the same time, the figures showed
that the proportion of A-class offices on total demand is usually by 20 – 30
% higher than their share corresponding to total supply of administrative
buildings in Prague. The crisis has changed this situation dramatically,
however.
Prague office market recorded several “five-year“ negative records during
the last year: decline in transaction activity (only 215,000 sqm were leased),
highest vacancy rate (13.2 %) and lowest volume of completed new construction
(mere 59,100 sqm). The fall of the Czech economy in 2008 and 2009 is visible
with a traditional delay. Analysis by King Sturge, however, expects an overall
improvement of the situation this year.
“It is and will not be easy. And it is certain that it will never be as
easy as before the financial crisis!“ these words by Olga Humlová from Salans
opened the Stavební fórum conference Real Estate Market >
Winter 2011 – Tax & Legal… Focus. Furthermore, this statement was
supported by the course of the conference. Although nobody puts catastrophic
visions before the domestic housing market any longer, we cannot count with an
explosive growth either.
The professional and media debate about the actual state of play on domestic
residential market was enriched by the consultancy King Sturge last week. Unlike
others, their analysis is an attempt to view the issue comprehensively including
placing the housing market in a macro-economic framework containing forecast of
the development this year.
It is typical for construction industry that is stands at the top of economic
development. Construction of anything is a long-distance run. When economic boom
finishes and a crisis or economic downfall starts, constructors continue to
build furiously – the trick lies in so-called supply of labour. On the
contrary, when the crisis comes to an end and everybody wants to invest and
build again, mortar mixers are empty. Before a structure is prepared to “start
digging“, several months pass. This is exactly what construction industry is
experiencing today (hopefully!) – differently in companies and differently in
the region.
According to analysis by Cushman & Wakefield, logistics property market
did extremely well in terms of leases last year. Tenants have signed contracts
for 845,000 “squares” of modern storage and industrial space – it is
close to results in the record-breaking year 2007 (it was 855,000 sqm then). In
terms of property development, however, the market has reached the lowest level
since 2004 – almost no new construction has occurred since the third quarter
of 2009.
We are waiting for the moment when people stop worrying about losing their
jobs and a positive perception of the future will outweigh – this is how
Kamil Kosman, director of real estate financing and mortgage department at
Česká spořitelna, defines the determining parameter of the further
development on the Czech real estate market and especially its residential
sector.
In 2010 investment transactions worth EUR 666 million were concluded in the
Czech real estate market, which is 17 % more than in 2009 when commercial
properties worth EUR 556 million were traded. This year should be even better,
according to King Sturge. However, the dominant real estate market player
– CPI group – will be struggling with foreign competition
rather more.
At the end of last year, it appeared as if there was an avalanche of
residential projects, or more precisely announcements of residential projects.
This is especially visible due to the situation raised by sales crisis in the
field of commercial flat construction. Today it seems a little that Prague is
experiencing or will experience a new housing boom in the near future. Does this
impression reflect the reality?
Insistent carol playing and Christmas bell jingles are again attracting
thousands of gift-hunting customers to retail centres and parks. For retailers,
this year´s Christmas is better than last year, however, “retail“
development has literally wept over its earnings this year. And the outlooks are
even worse: there were only new 76,000 sqm in shopping centres and 53,000 sqm
in shopping parks in the Czech Republic, although according to qualified
estimates, it will be less than a third of this area in the coming year.
Will the “islands of hope“ for the recovery of Slovak real estate market
from 2010 turn into a pleasant reality in the coming year 2011? The question
asked by participants of this year´s Stavebné fórum discussion meeting in
Košice on 7th Dec. While in February at the meeting focused on property
development after crisis, NBS representatives claimed there were up to six
thousand vacant flats in Slovakia and called the Slovak market as ambivalent and
oscillating, this year´s reality was discussed at the meeting named Stavebno-investičné a realitné
ambície 2010–2011 (Construction-investment and real estate ambitions for
2010–2011). Unfortunately without the participation of the Association of
Construction Entrepreneurs of Slovakia. Slovak real estate mosaic of the ending
year and its further perspective look more complicated.
According to experts, the real estate market in Central Europe turned the
corner in the last quarter of 2010. The range of sites where investors focus in
the region is still quite varied. In the main segment – office space
– Poland and the Czech Republic are doing well, Slovakia is a little worse
off. Hungary and Russia score partly, the Baltic countries are interesting.
Investments are already at the level of last year and prices modulated by profit
are also stabilizing. Thanks to this, real estate business is working again
despite various risks. Developers point to growing optimism in the global
property market. In addition, commercial real estate sector is expected to grow
next year.
Domestic construction companies of all sizes receive increasingly lower
number of commissions. This applies to commissions from the private sector but
perhaps even more from the public sector. While, for example in transport
infrastructure, the state was preparing 450 buildings in 2006, last year it was
276 projects and this year just 53. And it will not be any better in property
development – a new boom of commercial construction including residential
cannot be expected in the near future, according to many experts.
