october 5, 2006
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October 5, 2006. Presented by: Adam Sherriff-Scott +420.221.451.518. WHO WE ARE “We accelerate your success by making our Knowledge your Property. Colliers International A Global Partnership. - PowerPoint PPT PresentationTRANSCRIPT
The Current State of the Office Market in the CEE Region
October 5, 2006October 5, 2006Presented by: Adam Sherriff-Scott
+420.221.451.518
WHO WE AREWHO WE ARE““We accelerate your success by We accelerate your success by
making our making our KnowledgeKnowledge your your PropertyProperty
Colliers International Colliers International A Global PartnershipA Global Partnership
Established in 1898, Colliers is one of the leading commercial real estate organizations in the world. Our partners bring strong, stable local ownership and entrepreneurial and creative solutions together throughout the world.
Over 9,000 employees worldwide in 241 offices in 54 countries on 6 continents (130 in the Americas, 65 in Europe, Middle East and Africa (EMEA) and 46 in Greater Asia)
Colliers completed 31,394 leasing transactions in 2005 with a value of $18 billion.
Colliers completed 8,685 sales transactions in 2005 with a value of $37 billion.
Colliers has 595,725,580 square feet under management.
Annual revenues exceeding $1.4 billion
Established in 1991 – Budapest
Established in 1994 - Czech Republic
Leading real estate services provider in the region
Services We Provide:- Investment Sales- Office Leasing- Industrial Leasing- Valuation & Consulting
250 employees 14 regional offices
COLLIERS INTERNATIONAL CENTRAL AND EASTERN EUROPE
(CEE)
COLLIERS INTERNATIONAL CORPORATE SERVICES
Integrated Real Estate Solutions
COLLIERS INTERNATIONAL- CEE REGION
SELECTED CLIENT LIST
Providing service to satisfied clients in the Czech Republic for over ten years
ECONOMIC OVERVEWECONOMIC OVERVEW
7.3%5.8%
19.7%10.2%17.8%
12.2%
Czech RepublicHungaryPolandRomaniaSlovakia
AVERAGE
…growing economies = declining unemployment
Source: Experian
2002
Country: 2003
2004
8.1%5.9%
19.9%7.6%
15.2%
11.3%
8.2%6.0%
19.6%6.8%
14.3%
10.9%
2005 2006UNEMPLOYMENT FIGURES FOR CEE
REGION
7.8%7.1%
18.2%6.5%
11.6%
10.2%
7.9%7.6%
17.6%6.8%11%
10.0%
…GDP growth in the Czech Republic & the CEE Region
Czech Republic:
Poland
Hungary
Romania
Bulgaria
2006*
2004
2005
2007*
2008*
*Figures are forecasted
Source: Experian
4.0%
5.3%
4.0%
8.3%
5.7%
6.0%
3.2%
4.1%
4.1%
5.5%
5.0%
4.5%
4.3%
5.0%
5.1%
4.3%
4.8%
3.8%
4.8%
5.1%
4.5%
4.6%
3.9%
5.0%
4.3%
GDP GROWTH IN THE CEE REGION
….positive economic fundamentals=A STRONG INVESTMENT CLIMATE
*Source: Czech National Bank, December 2005
CountryCountry Standard & Standard & Poor’sPoor’s
Moody’sMoody’s Fitch-IBCAFitch-IBCA
Czech RepublicCzech Republic A-A- A1A1 AAHungaryHungary A-A- A1A1 BBB+BBB+
PolandPoland BBB+BBB+ A2A2 BBB+BBB+RomaniaRomania BBB-BBB- Ba1Ba1 BBB-BBB-SlovakiaSlovakia AA A2A2 AA
Investment Risk Ratings in the CEE Region are Strong Across the Board
CZECH REPUBLICCZECH REPUBLICMARKET SUMMARYMARKET SUMMARY
CZECH REPUBLIC – LOCATION MAP
BERLIN340 km
MUNICH385 km
VIENNA250 km
BUDAPEST450 km
WARSAW750 km
PRAHA
Czech Republic: Located in the heart of Central Europe!!
PRAGUE - GENERAL LOCATION OVERVIEW
Snapshot of the ten districts that make up Prague
NOTABLE STATISTICS Prague= 10% of CZ population and 20% of GDP 3.5% unemployment compared to 7.9% overall in Czech Republic Average monthly wages of 18,297-20,036 CZK compared to 14 500 CZK nationwide
LARGEST CITIES POPULATION• Prague: 1 200 000• Brno: 400 000• Ostrava: 320 000• Plzen: 164 000• Olomouc: 106 000• Hradec Kralove: 100 000• Ceske Budejovice: 98 000
OFFICE MARKET OFFICE MARKET OVERVEWOVERVEW
SubmarketSubmarket Office Stock Office Stock (m²)(m²)
VacancyVacancy 1Q 2006 Take-Up1Q 2006 Take-Up(m(m²)²)
2Q 2006 Take-Up2Q 2006 Take-Up(m²)(m²)
Mid-Year Subtotal Take-UpMid-Year Subtotal Take-Up(m²)(m²)
City CenterCity Center 406,938406,938 9.3%9.3% 31,71231,712 8,9988,998 40,71040,710
Inner CityInner City 942,278942,278 13.3%13.3% 18,67218,672 64,50264,502 83,17483,174
Outer CityOuter City 547,139547,139 8.4%8.4% 18,46118,461 16,50216,502 34,96334,963
TOTALTOTAL 1,896,3551,896,355 11.0%11.0% 68,84568,845 90,00290,002 158,847158,847
2Q 2006 Office Market Snapshot2Q 2006 Office Market SnapshotPraguePrague
*Source: Prague Research Forum
Key 2Q 2006 Stats – Prague Office Market
2Q 2006 Office Market Snapshot2Q 2006 Office Market SnapshotCzech RepublicCzech Republic
The Office market has stabilized in The Office market has stabilized in Czech Republic, especially in Czech Republic, especially in Prague.Prague.
Declining vacancy rates solidify Declining vacancy rates solidify strong demand from both new strong demand from both new foreign demand and organic growth foreign demand and organic growth of existing companies, even with of existing companies, even with many new developments.many new developments.
Strong office construction activity in Strong office construction activity in Prague could lead to a temporary Prague could lead to a temporary flattening in vacancy rates for the flattening in vacancy rates for the immediate future due to increased immediate future due to increased demand.demand.
LocationLocation Class AClass A Class BClass B
PraguePragueCity City CenterCenterInner CityInner CityOuter CityOuter City
18.0-19.018.0-19.014.5-15.514.5-15.513.0-14.513.0-14.5
14.0-15.014.0-15.011.0-12.011.0-12.010.0-11.510.0-11.5
BrnoBrno 12.0-14.012.0-14.0 10.5-11.510.5-11.5
PlzenPlzen 9.0-12.09.0-12.0 6.0-8.06.0-8.0
OstravaOstrava 9.0-11.09.0-11.0 5.0-9.05.0-9.0
Office Market - Average Rent (€/m²/month)
Sources: CBRE, Prague Research Forum
Major Office Deals in Prague - 2006Major Office Deals in Prague - 2006
Larger leases are being signed: overall average leased space in Prague for 2Q 2006 increased to 1,168 m², from 734 m² in 2005.
PROJECTPROJECT LOCATIONLOCATION SIZE SIZE (m(m²)²)
TENANTTENANT CLIENTCLIENT AGENCYAGENCY
CTPark SlapaniceCTPark Slapanice BrnoBrno 16,60016,600 CSADCSAD CTP InvestCTP Invest N/AN/A
CEZ BuildingCEZ Building Prague 1Prague 1 23,10023,100 Prague City HallPrague City Hall N/AN/A N/AN/A
Katerinksa Business CentreKaterinksa Business Centre Prague 2Prague 2 7,8007,800 PWCPWC Merrion PropertyMerrion Property N/AN/A
The ParkThe Park Prague 4Prague 4 1,4871,487 InbevInbev AIG LincolnAIG Lincoln DTZDTZ
Palac KrizikPalac Krizik Prague 5Prague 5 2,6002,600 Seznam.czSeznam.cz Smichov Terrasse s.r.o.Smichov Terrasse s.r.o. Colliers InternationalColliers International
Office Park Nove ButoviceOffice Park Nove Butovice Prague 5Prague 5 2,1182,118 Lease PlanLease Plan N/AN/A N/AN/A
Nile HouseNile House Prague 8Prague 8 1,2301,230 FordFord EuropolisEuropolis Cushman & WakefieldCushman & Wakefield
Palac KarlinPalac Karlin Prague 8Prague 8 1,5001,500 PanasonicPanasonic CEE Property InvestCEE Property Invest Knight FrankKnight Frank
Zirkon Office CenterZirkon Office Center Prague 8Prague 8 2,8042,804 ABBABB BACABACA N/AN/A
Vysocanksa PointVysocanksa Point Prague 9Prague 9 9,3359,335 Ministry of LabourMinistry of Labour N/AN/A N/AN/A
Podebradska 55Podebradska 55 Prague 9Prague 9 4,3774,377 AutocontAutocont N/AN/A N/AN/A
CTPark PlzenCTPark Plzen PlzenPlzen 2,0002,000 BodycoteBodycote CTP InvestCTP Invest Colliers InternationalColliers International
TOTALTOTAL 74,95174,951Source: CiJ – September 2006
Office development…on the riseOffice development…on the rise
Project NameProject Name DistrictDistrict Office Space Office Space (m²)(m²)
StatusStatus DeveloperDeveloper
Diamond PointDiamond Point Prague 8Prague 8 18,23118,231 CompletedCompleted KarimpolKarimpol
Luxembourg PlazaLuxembourg Plaza Prague 3Prague 3 23,94923,949 CompletedCompleted Orco Property GroupOrco Property Group
Carrefour EdenCarrefour Eden Prague 10Prague 10 6,4886,488 CompletedCompleted CarrefourCarrefour
Korunni DvurKorunni Dvur Prague 10Prague 10 4,1534,153 CompletedCompleted Africa Israel InvestmentAfrica Israel Investment
Novodvorska PlazaNovodvorska Plaza Prague 4Prague 4 5,0005,000 CompletedCompleted Plaza CentersPlaza Centers
The Park Building 8The Park Building 8 Prague 4Prague 4 8,0008,000 CompletedCompleted AIG LincolnAIG Lincoln
Andel City Phase IIAndel City Phase II Prague 5Prague 5 9,4009,400 CompletedCompleted UBMUBM
The Smichov GateThe Smichov Gate Prague 5Prague 5 10,00010,000 Completed Completed (opening 3Q 2006)(opening 3Q 2006)
ImmoconsultImmoconsult
Palac KrizikPalac Krizik Prague 5Prague 5 14,00014,000 CompletedCompleted CecopraCecopra
E PointE Point Prague 6Prague 6 7,1507,150 Under ConstructionUnder Construction ViterraViterra
RokytkaRokytka Prague 8Prague 8 4,0004,000 Under ConstructionUnder Construction SkanskaSkanska
““Nestle” CentrumNestle” Centrum Prague 4Prague 4 15,00015,000 Under ConstructionUnder Construction SEKYRA Group, a.s.SEKYRA Group, a.s.
BB Centrum GamaBB Centrum Gama Prague 4Prague 4 26,65026,650 Under ConstructionUnder Construction PasserinvestPasserinvest
South PointSouth Point Prague 4Prague 4 6,4476,447 PlannedPlanned AMA Development s.r.o.AMA Development s.r.o.
Office Park Nove Butovice/COffice Park Nove Butovice/C Prague 5Prague 5 6,8736,873 Planned (2008)Planned (2008) PDPPDP
TOTAL m² 165,341TOTAL m² 165,341
Major Projects in Prague - 2006
Key Market TrendsKey Market Trends
1.1. Regional secondary office market growth due to Regional secondary office market growth due to higher demand, lower rental rates, ample labor higher demand, lower rental rates, ample labor supply and lower wagessupply and lower wages
2.2. Institutional investors and developers looking to Institutional investors and developers looking to negotiate longer-term lease contracts, while negotiate longer-term lease contracts, while National and International companies are looking National and International companies are looking for more flexible opportunitiesfor more flexible opportunities
3.3. Larger-sized leases being signed in 2006 Larger-sized leases being signed in 2006
4.4. Development of brownfields in Prague is Development of brownfields in Prague is gradually changing the face of the citygradually changing the face of the city
12-Month Forecast12-Month Forecast
• Increased office supply across the Prague region could Increased office supply across the Prague region could potentially create a slight increase in vacancy rates.potentially create a slight increase in vacancy rates.
• Foreign investment money will continue pouring into the Foreign investment money will continue pouring into the CEE Region for the foreseeable futureCEE Region for the foreseeable future
• Strong absorption, continued economic growth and job Strong absorption, continued economic growth and job creation will add to demand for new construction in growing creation will add to demand for new construction in growing secondary markets like Brno and Plzen.secondary markets like Brno and Plzen.
• Adoption of the Euro will likely be delayed until 2012 or Adoption of the Euro will likely be delayed until 2012 or 2013, which could benefit the Czech economy and lead to 2013, which could benefit the Czech economy and lead to further strengthening of the Czech crown.further strengthening of the Czech crown.
Adam Sherriff-ScottAdam Sherriff-ScottDirector, Office Leasing & Tenant RepresentationDirector, Office Leasing & Tenant [email protected]@colliers.cz
Tomas FenclTomas FenclSenior Consultant, Office Leasing & Tenant RepresentationSenior Consultant, Office Leasing & Tenant [email protected]@colliers.cz
Mark ForwardMark ForwardSenior Consultant,Tenant RepresentationSenior Consultant,Tenant [email protected]@colliers.cz
Meagan CaldwellMeagan CaldwellMarketingMarketingmeagan.caldwell@[email protected]
Filip RerkoFilip [email protected]@colliers.cz
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