According the Czech Statistics Office regional developers started to build over 20 thousand new flats (up by 14% y/y) in the first half of 2006. Orco has pipeline of more than 3 thousand apartments, the most in Prague and also in other regional cities.
Our view:
The demand for new resident\l buildings is rising mainly due to expected VAT hike (from 2008) as it is still not clear what will class as “social falt” with lower VAT rate and low interest rates and easy access to mortgages. News is positive for Orco, but should not influence today’s trading.