Central and Eastern European economic growth declining – Over 2012, the Budapest office market showed the only downward rental movement in the CEE region with a fall of 10% over the year. Net effective rents in Bratislava and Prague remained largely flat over the year, as they have done for the past three years. Only Poland witnessed an increase in net effective rents, despite an increase in vacancy over the year which resulted from a significant increase in completions.
Poland is likely to see GDP growth halve to around 2.5%. GDP growth is forecast to fall to around 1.5% in Romania and Slovakia, and remain flat in the Czech Republic and Hungary.
Improving conditions in South East Europe – Further afield in the markets of South Eastern Europe (SEE), economies look set to bounce back from flat to negative 2012. Croatia, Serbia and Bulgaria are all set to benefit from an upturn in economic growth in 2013, with positive GDP growth of 1-3% forecast for the year ahead. Greece, however, is set to suffer another tough year as the economy continues to restructure.
Russia & Ukraine maintain positive growth outlook – In Russia, the story continues to be positive with GDP growth of 3.5% forecast for the year ahead, matching the rate of growth in 2012. The two Russian cities of Moscow and St Petersburg are the most likely to see this translate into downward vacancy as take-up stays ahead of new supply, although rental growth is most likely in Moscow in 2013.
