Manis Mall

The Irish over the past several years have enjoyed a special relationship with the Eastern European property market. The prospects for the imminent recovery remain allusive, albeit opportunities for finding good investment deals in Central and Eastern Europe are emerging.

The majority of investments in commercial property in Central and Eastern Europe so far this year is in office space, which absorbed about 40% of the total investment volume. Traditionally, foreign investors accounted for well over 80% of all investments in commercial real estate in Central and Eastern Europe in previous years. Prime yields-or returns on investment-now average around 10% and have recovered in recent months compared to their rates in 2008. 

The currently highest prime yield for office space has Kiev (15%) and the lowest has Warsaw (6.75%). Kiev also has the highest prime yield for retail properties (16%) and industrial space (17%). Prague has the lowest prime yield for retail space (7%), and, along with Warsaw and Bratislava, has the lowest yield on industrial real estate (8.75%). The recent downturn in the commercial real estate market has been relatively mild in Warsaw and Prague, which represent the most stable commercial property markets in the region. Even though property prices in most national markets are still declining, opportunities for investment will emerge soon, as the global economic recovery gives a thrust to the local economies of the Central and Eastern Europe. This will likely revive the attention of foreign investors, especially from Western Europe, who may be particularly interested, albeit cautious, in making investments in the markets that offer higher yields than those offered by their respective national markets.