According to HN daily, investment demand for commercial (office, retail and warehouse) is falling when the investment volume reached so far some EUR 465m, in comparison to EUR 774m in 1H07. Investment yields have increased by 30bp from 5.5% to current 5.8%. According to CBRE real estate consultancy, obtaining the loans takes more time and banks are reluctant to lend money for projects with significant risks, e.g. loans for acquisition of vacant properties are almost non-existent.
Separately, (690 CZK, 4,99%) was mentioned in this context with its completed City Tower. Albeit that the building is still contractually partly vacant, thanks to Raiffeisenbank (main tennant occupying some 40% of the project) the contracted occupancy is rather good but new projects will have most probably tougher times to get required occupancy. expects that the building could be fully contractually leased by the end of the year.
Our view:
The trend of investment demand slow down has been visible and indicated previously so we see this news as neutral at this stage but keep our eyes on tougher environment for real estate investors as well as developers. The likelihood of some projects in the pipeline of real estate developers may be put to the side or they could get under pressure regarding pricing of properties meant for disposals.