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Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

WARSAW-Particularly in the major CEE economies of Romania, Hungary, Prague and Poland, new evidence suggests that what began as a relatively simultaneous economic downturn may become a very uneven recovery, with some economies – especially Poland – proving more resilient, realtor Jones Lang LaSalle says.

Its latest CEE City Report sees Poland achieving positive GDP growth during 2009, with the Czech Republic following in mid-2010 and Romania and Hungary towards end-2010. Despite the lack of transactional evidence, JLL sees prime yields moved out on average 160 basis points in Prague and Warsaw, 220 basis points in Budapest and 260 basis points in Bucharest since Q2 2008. Additional readjustments are still likely through year-end. First-half investment volumes across the Czech Republic, Hungary, Poland and Romania remained very low at €430 million, down 84% from a year earlier. With only one deal above €100 million, the average in 1H09 was below €25 million, attributed to the lack of available debt and the misalignment in pricing expectations between buyers and vendors.

Rents have fallen across the office, warehouse and retail sectors in the last 12 months but have now stabilized at sustainable levels. Some pressure remains, particularly at the prime headline end, but landlords are increasingly able to offset this via tailor-made incentive plans. Office demand slowed in Warsaw and Bucharest but remained stable in Prague and Budapest. Retailers are cautious about expansions plans and even more selective over schemes they intend to occupy. Demand for warehousing has also slowed as industrial output and consumer markets decline.

“Looking forward into the second half of 2009 and into 2010 we expect to see markets stabilizing and gradually start to recover in line with national economies and the ability of banks, investors, developers and occupiers to begin trading again more confidently,” says JLL CEE Managing Director John Duckworth. New projects across all sectors that began or secured financing before the crisis will continue to be delivered into 2010. The supply pipeline is significantly lower compared to previous years and some cities may eventually see an under supply situation.

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