DTZ: Demand for offices in Prague is greater than in London (CZ)
Friday 26 June 2009
|The Q1 2009 take-up in Prague reached 73 % of the average quarterly take-up of 2005-2008 take-up. Prague is rated the third best city in the European comparison of 16 cities according to the survey of global property adviser DTZ, despite the prevailing economic situation.|
|“Of course, compared with the first three months of last year, which was a record year, this is a considerable decrease,” comments Martijn Kanters, Head of Consulting & Research at DTZ. “On the other hand, Prague and Central Europe have performed better than cities in Western Europe with the exception of Frankfurt.”|
Relatively good results from CEE can be explained by delayed effects of the economic crisis in this region, which will be reflected in the take-up results in the following quarters of 2009. Occupiers in western Europe have been affected much earlier.
In Frankfurt take-up reached 140,500 m², which is 11% more than the local average in 2005-2008. This is however caused by one transaction totalling 72,000 m² On the other hand, surprisingly Budapest is placed second and reached 91% of the four year average in Q1 2009. The city of London, conversely, was hitting its lowest level in 30 years in Q1 2009. According to the survey, biggest drops have been recorded in the year on year comparison in Moscow, Dublin and Milan (90%, 79% and 74%). In the comparison of the average of the last four years the worst placed are again Moscow, Rome, Dublin and Luxembourg.
The highest drops in rent have been registered in Kiev and Moscow, where a drop of demand was connected also with the devaluation of the currency. The tenants are using lower rent and therefore the interest in the center of the city is increasing. Luxembourg, Rome, Paris CBD and Budapest have been stable until now.
DTZ analysts expect that occupier demand will decrease further in most of the cities during 2009. Rents are reacting to this tendency and an overall decrease of 5-15% is expected in 2009. In some locations such as Moscow, Kiev, Dublin and London the decrease will be well in excess. Although Prague was the city with the highest year on year growth of rents, in Q2 there was a slight decrease and rents are under further downward pressure due to tenants renegotiating lease contracts.
"If the economy will fall deeper into recession it can logically be expected that occupier demand will continue to weaken leading to rising availability and downward corrections in rents. Positively, the relatively low supply pipeline will soften the impact of falling rents," said Bert Hesselink, Head of Agency at DTZ Prague.
Real Estate Consultancy