Gallery Apartments welcomes its first tenants CB Richard Ellis partnership sales agency

Despite almost complete standstill in construction activities in residential property market during 2009, lack of demand and postponement of many announced large projects by foreign developers, in the first place, yearend brings a modern residential-commercial complex in the heart of Belgrade.

CB Richard Ellis Serbia, partnership sales agency of the project Gallery Apartments, believes that in spite of the initial shock the property market has sustained due to a global financial crisis, the project such as Gallery Apartments represents a perfect example of success that will certainly positively influence buyers’ perception of quality and trust.

» More details..

Kragujevac ever more interesting foreign investment spot

Once strong regional industrial center, today Kragujevac apart from Belgrade and Novi Sad attracts significant amount of foreign capital, as the town with palpable long-term investment potential.

Namely, after Fiat bought the biggest domestic car manufacturer Zastava in Kragujevac, and Israeli investor Plaza has announced the construction of large modern shopping center, another renowned Greek investor Global Finance has chosen Kragujevac for the construction of residential-commercial complex, after a number of investment transactions in South Eastern Europe.

At a very attractive location, in immediate vicinity of future shopping center and Fiat’s factory, Global Finance will build residential-commercial of 25,000 sq m of GBA. The construction commencement is planned for Spring 2010, so the first buyers will be able to enjoy their new homes next year.

The project shall promote European concept of living, which lucky citizens of Kragujevac shall have the opportunity to buy at highly competitive prices due to challenging market conditions. The complex shall comprise modern residential units along with the commercial ground floor, which will allow for an ideal combination of work and living cocept.

All apartments shall feature premium quality finishes, high-standard construction materials, first class wall and floor coverings, while future buyers will enjoy the choice of kitchen designs and bathroom equipment up to their taste. These modern apartment layouts will imply highly functional space organization, various apartment sizes and layouts, as well as tailor-made structural solutions according to buyers’ requests.

The fact that this venture represents capital investment and epitome of quality and safety is further enhanced by the choice of CB Richard Ellis as exclusive sales agency, a leading global reall estate consultancy, which will lead the whole process of sales, helping future buyers choose the right apartment layout to suit their needs at competitive price as well as giving them advice on credit options.

CB Richard Ellis Exclusive Sales Agent of Residential and Commercial Complex Kalemegdan Park

CB Richard Ellis, Serbia has been chosen as exclusive sales agent of currently the most exclusive residential and commercial complex in Belgrade – Kalemegdan Park.

MPC Properties, a renowned local developer has recognized CB Richard Ellis as reliable strategic partner, whose global ‘know how’ shall add further value to both the development consultancy phase as well as to the overall sales process of this unique project in Belgrade Property Market.

The completion of the project is envisaged for the first half of 2011, when Belgrade will get its Manhattan condominium in the true sense of the word.

Project Description

Located at the very heart of Old Belgrade, this elite residential complex is tucked away in a green oasis of the most beautiful and the oldest Belgrade park – Kalemegdan. Embraced by authentic Dorcol streets Tadeusa Koscuska and Cara Urosa, the future complex shall be an epitome of luxury in every sense. Architectural design of the project will perfectly match the surroundings and the architectural concept of the area. The future complex shall hold app. 12.000 sq m of GBA, covering six floors, with a total of 28 to 34 units of 80 to 400 sq m size. Apart from 24/7 video surveillance and multi-level underground parking space, the future tenants shall enjoy mini parks, spa & fitness center, wine cellar, whereas the ground floor shall host a bar along with the reception as a warm welcome to the visitors and clients of the complex. Additionally, the complex shall also have a restaurant and a number of stores, that would add further living value to this luxurious urban zone of tranquility and pleasure.

The complex shall comprise two blocks of apartments with separate entrances and two-way orientation to two most popular Dorcol streets. Future buyers of the apartments in this prestigious oasis of elegance, peacefulness and comfort will have the opportunity to choose the finishing works, enjoy some flexibility when it comes to the organization of rooms in their future apartments or possibly space reorganization and integration of two residential units into one in some cases.

CB Richard Ellis exclusive leasing agency of new office building in New Belgrade

Belgrade office market will soon be richer for another modern office building, as we find out from CB Richard Ellis, the exclusive leasing agent of the project.

Business-commercial complex West End is located in business district of New Belgrade, in Block 60, in Tosin bunar area, in close proximity of E70 Highway and central New Belgrade boulevards, at mere 15-minute drive from the airport.

West End business complex will feature two independent five-storey office buildings of authentic architectural style, totaling 12,500 sq m of GBA, with underground parking space of 1,500 sq m and secured open parking lot of 88 parking spaces capacity. The completion of the construction of the first phase is planned for end November, whereas the whole complex shall be finished in February 2010.

The tenants who decide on movement or expansion of their business into this modern business complex shall enjoy maximum flexibility of office space, since every floor can be subdivided into separate units in accordance with the requirements of the tenants and standards of their various businesses. What makes standards of this building different in the market is the fact that standard fit out presumes suspended ceilings and raised antistatic floor, which significantly facilitates further fit out requirements according to tenants’ wishes.

The blend of unique colourful design and glazed façade represent unusual contrast of modern design and corporate image of modern business center. This is further enriched by rounded frontage lines with retail space on the ground floor, envisaged for service businesses which will make everyday corporate environment of the tenants more enjoyable.

CB Richard Ellis Exclusive Leasing Agent of Hyperium Business Center in Macedonia

CB Richard Ellis, Serbia has become exclusive leasing agent of new A Class Office Building in Skopje, Macedonia.

This modern business center represents EUR 17 m worth investment project of the investor Hypo Alpe Adria Leasing.

“Hyperium” Business Center, characterized by unique and very recognizable architectural design, shall comprise two five-floor office buildings holding approximately 13.000 sq m of GBA, including two-level underground parking space of 200 parking spaces capacity.

The project shall be finished by the end of the year, while interested companies may even now enter the lease agreements negotiations.

At the moment Hyperium represents one of the biggest office buildings on Macedonian market, whereas such an investment under current market conditions reflects the current demand on the market for new concept of office building that would offer fully functional and immediately operational office space to prospective tenants, with no need for any additional investment.

Future design, layout and amenities

The combination of attractively designed balconies and curtain wall façade has provided a sophisticated blend of modern design and functionality, while stylish stone walls in central part represent an excellent structural connection between the two office buildings, giving a special touch to the overall architectural design. This is further enhanced by passarelles which via internal platform provide a link between the two complex segments.

The project offers highly enjoyable corporate setting that provides its tenants with a true sense of business community, which is in modern business world not considered as luxury but a necessity. The business center is designed as plug & work office space, which perfectly corresponds to the requirements of modern business standards, greatly facilitating the very process of business expansion or movement of companies to this new office building.

The complex shall have all the amenities and facilities necessary for everyday business, including fully equipped up-to-date congress center, which the tenants shall have the possibility to rent for seminars, conferences, workshops or presentations. 24/7 Video surveillance, four-pipe HVAC, restaurant with catering services, visitors’ open parking lot, are just some of the amenities that will definitely make tenants’ everyday business setting much more comfortable and safer. What makes this project positively different and further adds to its competitiveness in the market is also Hypo Pavilion, a wholly separate unit within the complex that will be used as exhibition space

Lexmark Selects CB Richard Ellis as EMEA Facilities Management Property Advisor

CB Richard Ellis Group, Inc. (NYSE: CBG) today announced that it has been selected by Lexmark International Inc. (NYSE: LXK), a global developer, manufacturer and supplier of printing and imaging solutions, to provide facilities management services across their 500,000 sq ft EMEA sales and marketing office portfolio.

This latest appointment reflects the ongoing success of CBRE's partnership with Lexmark which commenced in 2005 with a three-year contract to provide strategic portfolio and transaction management services across the EMEA region. In 2006 CBRE was further appointed to provide facilities management services for Lexmark's corporate headquarters in Lexington, Kentucky. And 2008 saw the reappointment of the transaction management services contract in EMEA, which was also notably extended to include the US and Asia.

» More details..

European Industrial Investment Activity set to Rise

Investment turnover in Europe’s industrial and logistics real estate sector totaled nearly €2.5 billion in the first half of 2009, maintaining its 10% share of the wider investment market, and with the potential to increase, according to CB Richard Ellis’ latest EMEA Industrial & Logistics MarketView report.

Richard Holberton, Director of EMEA Research, CBRE, said: “The defensive characteristic of a high-income return, and hence less dependence on income growth, is one factor that enhances attraction to investors in weak economic conditions. Assuming that investment levels are maintained in the second half of 2009, there is scope for absolute levels of investment in the industrial sector to rise in 2010.”

» More details..

Major Western European Markets drive quarterly increase in European Property Investment Activity in Q3 2009

Significant increases in real estate investment turnover in the UK, Germany and Spain in the third quarter (Q3 2009) propelled an upturn in the European commercial real estate investment market, according to the latest data from CB Richard Ellis Group, Inc. European investment activity in Q3 2009 totaled €17.3 billion, a 34% increase on Q2 2009 and the highest quarterly result so far this year. Despite the quarterly increase, in year-on-year terms the Q3 2009 total compares with the €30.0 billion investment turnover recorded in Q3 2008.

» More details..

Cisco Systems Awards CB Richard Ellis Group, Inc. Global Project Management Services

CB Richard Ellis Group, Inc. (NYSE:CBG) today announced it has it has been selected by worldwide networking leader Cisco Systems to be its preferred provider of project management services globally. These services will encompass capital construction projects within Cisco’s 506 locations spanning 87 countries and totaling 23.6 million square feet.

CBRE was selected by Cisco after a competitive evaluation process. Under a multi-year agreement, CBRE will manage global coordination and delivery of all projects. Potential project types range from fit-out of small field offices to large-scale campus development to complex data center construction. Locations supported range from Cisco’s San Jose headquarters campus to outposts in diverse emerging markets.

» More details..

Investor interest to spread from prime into secondary property in key European Markets

CB Richard Ellis’ European investment market briefing at Expo Real in Munich today revealed that investor sentiment is improving across much of Western Europe, mirroring the better economic performance that has been seen and the strong run in Europe’s stock markets since March. Many REITs are now trading at a premium to NAV, indicating an expectation of improving capital values.

» More details..

Further evidence of European yields stabilising in third quarter

Prime yields have shown further signs of stabilisation across Europe’s real estate markets, and are trending downwards in several locations, according to the latest third quarter data from CB Richard Ellis. Initial estimates show the CBRE EU-15 all-property average prime yield index remaining stable at 6.13% in Q3, reflecting stronger investor sentiment towards core prime assets in many parts of the market. This series had risen by 130 basis points (bps) between mid-2007 and the first quarter of this year, since when it has remained level.

» More details..

Goef Investment Activity accelerating with €12 billion potential spending power

Liquidity levels across the German Open-ended Fund (GOEF) sector have been on the increase compared to the recent past, according to new analysis by CB Richard Ellis. The GOEF sector as a whole currently holds around €18 billion in cash or immediately liquid assets, which translates into up to €7.5 billion immediate spending power on real estate. This increases to as much as €12 billion over the next two years if inflows continue as expected.

Yet not all of the funds are in equally strong positions. Current liquidity levels are especially high for three fund managers in particular – Union Investment, DEKA (including WESTINVEST) and Commerz Real – who between them have over €6 billion immediate spending power.

» More details..

CB Richard Ellis reports continued reduction in take-up across the European Data Centre Market

The European Data Centre market continued to see a reduction in take-up in the second quarter of 2009, according to the latest quarterly report by CB Richard Ellis (CBRE), European Data Centres, which has monitored the worldwide Carrier Neutral Hotel supply since 1999.

There are signs, however, that corporate budgets will be increased in 2010, which should fuel take-up in the Retail and Wholesale Co-location markets in particular.

Overall take-up in Quarter 2 2009 was only 6,440 sq m across the five Tier 1 markets. This brings the total take-up for the first half of 2009 to 17,460 sq m which represents the lowest performing half year since 2004, compared with the 64,140 sq m for the first half of 2008.

» More details..

New Global MarketView Analyses

Back from the Brink… But What Next?, a new Global MarketView report issued by CB Richard Ellis (CBRE), reports some stabilisation and recovery in the world’s commercial real estate markets at the mid-point of 2009.

The quarterly global report, which scrutinises economic and real estate trends across the world’s three key regions, looks at the obvious indicators of weak market conditions but also identifies some positive developments, including initial signs of recovery in some regions:

» More details..

European Commercial-Property Deals Plunged in Value

CB Richard Ellis Group, Inc. announced today that, as widely expected, European investment activity continued to slow in Q1 2008 as the credit squeeze impacted transaction volumes. European investment turnover totaled €37 billion in Q1 2008, compared with €58 billion in the final quarter of last year.

The decline in activity, which became evident in the last quarter of 2007, was more pronounced during the first quarter of 2008. Lower levels of activity were reported across most of continental Europe. In the UK, however, where the slowdown in transactions emerged earliest, turnover remained at a similar level as Q4 2007 at approximately €10 billion. The UK has seen a sharper correction in pricing than other markets, and higher yields have already started to attract the interest of equity investors.

Outside the UK, the continent’s two largest markets - Germany and France – saw lower volumes than in the previous quarter or in the equivalent period of last year. After a record final quarter of 2007, trading in Germany has slowed, especially for large assets and portfolio deals. In France, where the majority of trading tends to be in Ile-de-France offices, the reduced number of deals reflects an ongoing mismatch in pricing expectations between buyers and sellers. With yields still amongst Europe’s lowest, buyers are reluctant to transact at current prices with investors thus adopting a “wait and see” approach.

Despite the weakening in Europe as a whole, activity in some markets remained healthy. The total value of deals actually increased in Finland and Italy relative to the levels seen in recent quarters; activity in both markets was driven by strong cross-border interest, especially in the retail sector.

Michael Haddock, EMEA Research Director, CB Richard Ellis, said: “The underlying property fundamentals remain relatively sound. Expectations of economic weakening are a cause for concern, but thus far the impact on occupier demand has been limited. The European investment market has started to see a correction in pricing in the first few months of the year, with the prime segment of the market having seen an outward yield shift of somewhere between 25 and 50 basis points. Following a rather rapid correction, the general feeling is that the UK market is levelling off, with current pricing not far from equilibrium, provided there is no further deterioration in the economic outlook.”

Jonathan Hull, Executive Director of EMEA Capital Markets, CB Richard Ellis, said: ”Investors who are reliant on the debt markets for their capital have inevitably been less active, but there are many equity-based investors who are watching pricing developments closely. The German open-ended funds have been most active in seizing opportunities so far. In the first quarter of this year, they accounted for almost 20% of the Central London office market activity, and also were very active in the Nordic and Central and Eastern European markets. Given that these German funds are estimated to have current liquidity of around €22 billion, we expect them to be very active in Europe for the remainder of the year.”

Average Deal Size tumbles as large lot size deals dry up in European Commercial Property Market

The average transaction size completed in the European commercial real estate market in the first half of 2009 has fallen by more than half since the peak of the market in 2007, reflecting the extent to which the credit crunch has affected the ability of investors to complete large deals in today’s market. The average size of transactions agreed in H1 2009 in Europe fell to €18.4 million, a 59% decline from the €44.4 million average deal size recorded at the peak of the market in H1 2007, according to new research released today by CB Richard Ellis.

» More details..

CB Richard Ellis selected by Pfizer to provide Facilities Management Services for 10 European Offices

CB Richard Ellis Group, Inc (NYSE: CBG) has been selected by Pfizer Incorporated (NYSE: PFE), the world's largest research-based biomedical and pharmaceutical company, to provide facilities management services across 10 of Pfizer’s offices in nine European cities.

The initiative is aimed at establishing world class operating practices throughout Pfizer’s real estate portfolio through direct integration with CBRE’s European facility management infrastructure.

Matthew Pullen, Head of CBRE Global Corporate Services EMEA, said: “Pfizer are globally renowned as a leader in their industry and widely acknowledged for their commitment to innovation. CBRE’s engagement with Pfizer reflects this innovation and represents another important step in the evolution our European facilities management business. We continue to see strong demand from the world’s largest occupiers to leverage our outsourcing platform in order to drive down costs and streamline operating processes.”

CBRE were selected by Pfizer following a structured market evaluation process conducted over the last nine months.

» More details..

Industrial & Logistics Property Sector sees sustained investor interest

Despite generally subdued levels of investment activity in the European real estate market over the past year and a half, there is still evidence of interest in the industrial and logistics sector according to new research from CB Richard Ellis. The logistics sector continues to offer a relatively high and stable income, with overall performance less dependant on the more variable elements of growth assumptions, making the sector increasingly attractive to investors seeking defensive assets.

David Turner, Executive Director, Capital Markets, CBRE, said: “We have seen quite a few funds repositioning themselves to include logistics in recent times; although, like all sectors, investment volumes have been down, relatively the decline has been shallower and there is an ongoing trend towards logistics growing its share of overall European investment market, from 7% to 10% during 2008. We are aware of a number of parties looking to target this sector over the remainder of the year either through new capital-raising or by putting previously unspent funds into the market.”

» More details..

Upturn in European Property Investment Activity in Q2 matched by stabilising yields

CB Richard Ellis Group, Inc. today announced a slight upturn in the European commercial real estate investment market, with turnover for the second quarter (Q2) of 2009 totaling €13 billion, a 12% increase on the €11.6 billion transacted in Q1 2009. The increase in activity was heavily weighted towards the last few weeks of the quarter.

This increase in activity has been matched by stabilising yields. The CB Richard Ellis EU-15 all-property average prime yield rose by just 2 bps in Q2 to 6.13% - a significant change from the recent trend that had seen the average yield increase by 103 bps over the previous four quarters. Of particular note was the fall in the average office yield (albeit by just 2 bps) as a result of tightening yields in Paris and provincial UK markets.

» More details..

CEE Property Investment down 91 pct in first half-CBRE

Central and Eastern European (CEE) commercial property investment plummeted 91 percent year-on-year to around 560 million euros ($779.5 million) in the first half of 2009 as buyers and sellers hit a stalemate over pricing.

The CB Richard Ellis (CBRE) data obtained exclusively by Reuters demonstrates how credit market turmoil in western Europe has impacted nascent real estate markets further east, sparking a heavy exodus of debt-dependent foreign investors.

'Equity investors continue to see prime property in core Central European markets as relatively safe investments and therefore as good targets as part of strategies to diversify and seek relatively attractive returns outside their home markets,' said Jos Tromp, head of CEE research & consulting.

'But as the amount of available core product in Central Europe is limited and agreement on pricing is still proving challenging, investment volumes remained low in the first half of 2009,' he added.

CBRE, the world's biggest real estate broker, said first half investment activity was concentrated in Russia and the core Central European markets of Poland and the Czech Republic, which saw total deals of 249 million euros, 114 million euros and 73 million euros respectively.

As a result, turnover in these three countries accounted for almost 78 percent of the region's first-half 2009 investment volume, compared to 65 percent in the same period in 2008.

Tromp said the relatively high levels of activity in the Russian investment market has been driven more by local investors and rebounding commodity prices, which has stimulated demand for property investment.

Almost half of investment activity took place in the office segment, while retail was traded much less than in recent years, mainly because of challenges in securing finance for larger lot sizes and an investor preference to hold onto retail property in tougher economic conditions.

Just 17 percent of the total investment activity was for retail properties compared to 33 percent in the corresponding period last year.

Pavel Schanka, CBRE's director of CEE capital markets, said he expected market activity to increase in the second half of 2009 as foreign equity buyers started to compete with local buyers for prime investment opportunities and several suspended German open-ended funds returned to market.

Investors target Russia and Central Europe during slow first half for CEE Property Investment Market

Total investment turnover in commercial real estate in Central and Eastern Europe (CEE) totalled approximately €560 million in the first half (H1) of 2009, according to CB Richard Ellis’ forthcoming report, CEE Property Investment MarketView H1 2009. This total was down 86% from volumes seen in H2 2008 and down 91% compared with H1 2008.

CEE H1 investment activity was concentrated in Russia (€249 million) and the core Central European (CE) markets of Poland (€114 million) and the Czech Republic (€73 million). As a result, turnover in these three countries accounted for almost 78% of CEE’s H1 2009 investment volume, compared to 65% in H1 2008. Jos Tromp, Head of CEE Research & Consulting, commented: “Equity investors continue to see prime property in core Central European markets as relatively safe investments and therefore as good targets as part of strategies to diversify and seek relatively attractive returns outside their home markets. But as the amount of available core product in Central Europe is limited and agreement on pricing is still proving challenging, investment volumes remained low in the first half of 2009. The relatively high levels of activity in the Russian investment market has been driven more by local investors, significant yield movement in recent quarters, and rebounding commodity prices so far this year.”

» More details..

Nissan Selects CB Richard Ellis as European Strategic Property Advisor

CB Richard Ellis Group, Inc. (NYSE: CBG) today announced that it has been selected by Nissan Europe S.A.S as its strategic property advisor for the region.

The European contract win marks an important expansion of Nissan’s relationship with CBRE in North America, where CBRE have been engaged as a full-service real estate partner since July 2007. The European contract, primarily comprising transaction and consultancy support, is the first of its kind awarded by Nissan across the European region. The contract reflects the continued growth and success of CBRE’s Corporate Services business in Europe, where earlier this year it announced other programmes with Europe-based corporates including StatoilHydro and France Telecom.

Mark Steele, General Manager G&A Controller at Nissan in Europe, said: “The appointment of CBRE is an important step in the development of our integrated global business support infrastructure. In a climate where operational efficiency is vital to success, we are committed to driving the performance of our property portfolio, taking full advantage of favorable property market conditions and maximising the value from our existing assets.”

Matthew Pullen, Head of CBRE Global Corporate Services, EMEA, said: “The expansion of our global relationship with Nissan represents a great vote of confidence in CBRE’s operating platform and worldwide corporate services capability. Current market conditions represent a significant opportunity for occupiers to reduce their exposure to real estate risk and cost through leveraging a unique set of property market dynamics. Property markets globally continue to favour the occupier with falling rents and increased vacancy in many markets.”

Nissan was founded in December 1932, and is among the top three Japanese automakers. As at 31 March 2008, Nissan’s global sales volume was 3.7 million units, equating to total net sales of 10,824.2 billion yen, and employed (on a consolidated basis) in excess of 180,000 employees.

New York still World’s most expensive Retail Market despite rental falls

Prime retail rents have fallen in almost every region across the world as the global recession impacts consumer sentiment and retail sales, according to new retail research from CB Richard Ellis (CBRE), Global Retail MarketView.

Demand for retail space has declined in most markets across the world as consumers cut back on spending and unemployment continues to rise in many countries. Emerging and less established markets have been most significantly affected. Buenos Aires saw the largest annual decline in retail rents year-on-year with a drop of 37%, followed by Warsaw with a 33% decline and Washington DC with a 26% decline. Whilst some markets have continued to experience year-on-year increases in retail rents, in many cases the current pressure is downward.

» More details..

Rising public debt encouraging sales of Government property assets

Rising public debt levels in response to the global banking crisis and recession appear to be encouraging a new wave of government property sales across Europe, according to new research from CB Richard Ellis (CBRE). CBRE has today released a new report, Governments Turn to Property Sales?, which considers the scope for sales of government property and reviews asset disposal plans in a number of major markets including France, Germany, Greece and the UK.

The report follows the announcement by the UK Government that it is to sell up to £20 billion of commercial property and related assets during the next 10 years while generating a further £5 billion in annual operating cost savings. With other governments also developing similar plans, the report analyses the investor appeal of such assets in the current market and considers the potential for these dispositions to become a more powerful global trend in the coming 12 months.

» More details..

Tokyo Now World’s Most Expensive Office Market. London’s West End and Moscow Ranked Second and Third Respectively

Tokyo’s Inner Central District has supplanted London’s West End as the world’s most expensive office market, according to CB Richard Ellis Group, Inc. (CBRE) Global Research and Consulting’s semi-annual Global Office Occupancy Costs survey. London’s West End is now the world’s second most expensive office market, followed by Moscow, Hong Kong’s Central Business District (CBD), and Tokyo’s Outer Central District in the CBRE report, which tracks office occupancy costs in more than 170 cities around the globe.

Global financial centres have been most significantly affected by declining occupier demand and, as one would expect, registered the most material decreases in office rents. In many cases, major global office markets have seen occupancy costs fall by 20% or more over the last 12 months. Across the 170 cities as a whole, office occupancy costs fell 2.8% over the 12-month period ending 31 March 2009 (on an un-weighted average basis) compared with an increase of 8% in the 12-month period ending September 30, 2008. Singapore had the largest year-on-year decrease in occupancy costs with a drop of 34%.

» More details..

CEE Commercial Property Investment Activity in April Beats Q1 2009 Monthly Average

Property investment turnover in Central & Eastern Europe (CEE) totaled approximately €100 million in April through a total of five transactions, according to CB Richard Ellis’ CEE Property Investment MarketView for April 2009. While this means that property investment remained low in April compared to previous years, it was about 32% higher than the monthly average for the first quarter of 2009. April’s transactions included three retail transactions along with one office and one industrial transaction. Jos Tromp, Head of CEE Research & Consulting, explains: “The core Central European markets of the Czech Republic and Poland accounted for four of the five April investment transactions and remain the most active CEE markets not only in terms of transactions closed, but also in terms of investor interest.”

Overall, April’s market performance confirms that the CEE property investment market remains slow and reflects the market’s reliance on investment by the German Open-ended Funds. The most active investor in CEE so far in 2009 has been DEKA with its acquisitions of Jungmannova Plaza in Prague and Grzybowska Park in Warsaw.

CEE markets have become more attractive to potential investors as yields have moved out across the region in recent quarters. Moreover, yields in certain Western European markets such as London, Paris and Madrid seem to be close to bottoming out, which could herald more stable yields for prime properties in CEE later this year. Tromp comments: “While further outward movement of yields from Q1 2009 levels is expected across CEE, a foundation is being laid on which property values in CEE can build.”

In the meantime, opportunistic buyers continue to express interest in the region, but this is not yet being realised in transaction levels as prices have not moved out to the extent deemed appropriate by investors. According to Pavel Schanka, Director CEE Capital Markets: “Equity rich investors are in a unique position in that they have limited competition and the opportunity to purchase top-flight buildings with strong income-generating potential that would not have come onto the market in normal circumstances. Now that yields have risen rapidly and rents are nearing sustainable levels in certain markets, CEE capital values are much more stable than they were a year ago.”

Weakening Demand Gives Tenants Scope to Negotiate in European Office Markets

With the fallout of the global economic downturn now hitting leasing markets across the world, landlords are under increasing pressure and tenants are initiating negotiations on rents and lease terms, according to the latest reports by CB Richard Ellis.

Leasing market conditions generally deteriorated over the first quarter of 2009, as sharply weaker economic activity and negative sentiment about future prospects led to a reduction in office take-up and general downward pressure on rents. The CB Richard Ellis office rent index for the EU-27 fell by 3.6% in the first quarter, with rents down by around 6.5% from their peak of last year. The quarter's decline reflects rental falls in most markets, although some key cities, such as Frankfurt and Milan, remained stable.

Vacancy levels are rising across Europe, driven upwards by a combination of weaker demand, new developments entering the market and, increasingly, occupiers looking to dispose of surplus space. Vacancy rates across the EU-27 group have risen by over a percentage point over the past year. As a result, further rental falls are expected in most major markets. However, new construction starts have virtually ceased in the region, which will constrain stock additions in the medium term. Although of little benefit in the short term, this will help rents to stabilise more quickly once some level of occupier demand returns to the market.

“Landlords are finding it increasingly difficult to lease vacant space, given the understandable caution being expressed by most occupiers at present,” commented Richard Holberton, Director, EMEA Research at CB Richard Ellis. “With those occupiers requiring space driving a hard bargain, and increasing choice available in the market, it is inevitable that we will see further weakening in rents and an increase in leasing incentives in most markets over the coming months,” Holberton added.

At the same time, changing market conditions are offering new real estate opportunities for occupiers as they too seek to cope with difficult conditions in their own markets. Companies across a broad range of sectors and geographies are experiencing weakening demand for their products and services, in many cases coupled with price deflation. Occupier behaviour is therefore largely characterised by caution, cost reduction and space rationalisation.

Driven to cut costs, occupiers are pursuing a range of new strategies to take advantage of the market. Even when they are not seeking additional space, tenants are increasingly able to negotiate with their landlords. Those who have impending lease expiries or break clauses are in a particularly strong position, as few landlords would welcome the prospect of a vacant building in the current market. Investors are focused on two factors at present: the quality and the length of their income stream. These factors determine the value of an asset, so a good tenant who offers to renew a lease is well placed to secure a rent reduction or other benefits.

However, the same pressures mean that even those who have no formal option to vacate are currently in a strong position, provided they are a good quality tenant. Occupiers are initiating discussions seeking rent reductions or rent-free allowances in exchange for lease extensions, or seeking to alter specific lease terms (such as dilapidations or reinstatement clauses) in their favour, thereby reducing liabilities they have to carry on their balance sheet.

Matthew Pullen, Head of Global Corporate Services EMEA, CB Richard Ellis, commented: “With corporate expansions scarce and asset values and investment returns falling, some office landlords are under huge pressure and the negotiating power is often in tenants’ hands in many European markets. Occupiers who have an opportunity to vacate and are actively prepared to do so are particularly well-positioned. The cost and quality of alternative accommodation available, as a greater choice of quality space enters the market, makes the threat of relocation credible to the landlord and therefore places tenants in an even stronger position.

“The ability to secure rent reductions or reduce space will depend on a wide range of factors including local market conditions, lease structures and the position and attitude of individual landlords. Yet the current market does present opportunities for occupiers who can combine awareness of real estate market conditions with an ability to influence further changes in their business cultures. Timing, market intelligence and high-quality advice are vital at this time.”

How Global is The Business of Retail in Belgrade?

The key activities pertinent to commercial real estate market and especially retail market both in Belgrade and the region have been significantly influenced by effects of global financial crisis, reflecting rent dynamics and the ratio between demand and supply. Namely, certain retail chains have temporarily suspended their further international expansion till economic and financial indicators are not more promising. Some of them have chosen franchising system to expand their businesses, thus reducing risks, costs and avoiding time-consuming bureaucratic procedures.

On the other hand, the current situation can be perceived as a chance for the companies with positive cash flow, as bold moves at this moment may guarantee larger market share in future, which would certainly be solid basis for ‘better’ times. Recent years mark ever greater interest of both local and international developers in retail developments. However, it is yet to be seen which projects shall be developed, which primarily depends on the readiness and capability of the banks to finance the announced projects.

The current size of existing modern shopping centers in Belgrade and elsewhere in Serbia still lags behind the regional trend in more developed countries of Central and Eastern Europe. According to a number of sq m of modern shopping stock, Belgrade with its 90 sq m of shopping stock per 1,000 inhabitants follows the same trend as Sofia, which is, however, considerably below the regional average of 180 sq m per 1,000 inhabitants.

When compared to other capital cities of the region, the difference is even greater, as the average of the capital cities of the region amounts to even 450 sq m per 1,000 inhabitants.

According to the same criterion, Belgrade is lagging behind Podgorica as well, which with the opening of Delta City shopping mall has 200 sq m per 1,000 inhabitants, whereas Zagreb currently holds 195,000 sq m of shopping stock which accounts for 250 sq m per 1,000 inhabitants

With regard to the official data big developers such as Big Centers, Plaza Centers, Delta, MPC, Ocean Atlantic, Pevec, Tus, TQ, Vondel Capital have not suspended any of the development projects announced; however, some of them say that the completion dates may be postponed.

With the opening of Shopping Mall Usce, the supply has been enriched with new brand names such as J. LO, Salsa, Glow, Lolipop, Prenatal, to name a few. Moreover, Delta City shopping mall as the first of the kind have attracted significant number of new international brand names, which led to the increase in the number of internationally recognised retailers present in Serbia in the past year from 14 to 17%, ranking Serbia as 47th on the global list (the research conducted by CBRE International). The highest rents in shopping centers in Belgrade have kept the same value in the range from 40 to 60 EUR per sq m, depending on the position and the size of the retail space.

In the meantime, due to the lack of available new retail space, central Belgrade shopping zone (Knez Mihailova Street, Terazije Square) still remains key retail location, especially for those retailers which enter the market for the first time. High pedestrian flow and the importance of such locations in retail sense account for low vacancy rate, whereas asking rents remain high, ranging between 80 and 120 EUR per sq m, while prime locations in Knez Mihailova Street even amount to 120+ EUR/sq m/month.