LONDON-Commercial real estate in central and eastern Europe isin the same market phase and offers the same opportunities assouthern Europe some 10 years ago, according to Neil Turner, CEOGermany of global asset manager Schroder Property.

In a new report, he wrote that 2011 will show falling yields forcommercial property as investment liquidity is going to improve andvaluation discounts for large spaces, such as in malls, willdecline. Retail buildings and malls are less economically dependentthan office, thus currently recovering at a faster rate. Schrodersexpects a moderate export-driven upturn in the economy in thecoming year. Sweden and France are the most promising retaillocations in western Europe.

In the east, the Czech Republic, Poland and Hungary showincreasing consumer spending and offer many opportunities – but notwithout risk. The markets are still in a gestation period, andoffer far fewer malls per inhabitants than in the west. Newdevelopment usually means new construction as opposed to renovationas is common in western Europe. A constant interest in investmentsin CEE by international companies has a positive influence onrents. Foreign exchange risk remains a factor for retailers as wellas a rise in rents as demand for space picks up. Rents aredetermined in euro while landlords are paid in local currency.