Worldwide investments into the real estate market were regressing in the first quarter of 2008. However, investments into the CEE markets broke the trend in the first three months of 2008 when the investment volume reached a high level of about ─3 billion. Compared to 2007 this corresponds to 21% of the total annual turn-over, whereas from experience the first quarter is known to be the weakest one, Property-magazine.eu reported.

CB Richard Ellis experts observe the following trend: until 2007 especially Central European markets such as Poland, the Czech Republic and Hungary were of interest, now the interest for investments has shifted to Southeast- and Eastern Europe. Like in Austria, German Open-ended Funds are among the most active investors in the CEE markets, such as other institutional investors whose activities will be intensified in the upcoming quarters. Austria is like before one of Europe's most stable markets.

In terms of yields there is no clear tendency visible on the CEE markets. While yields increase slightly in Central European countries, yields are at 7.5% in Russia and comparatively stable. Also no clear tendency is seen in South Eastern markets, the development of yields differs here from city to city. Jos Tromp, Head of Research CEE at CB Richard Ellis, forecasts a slight increase in yields for the next two quarters.

Still the demand for office space in the CEE countries is high, though vacancy rate will increase in the coming months as the production of areas will increase. In Prague it will be at 5.9% by the end of the first quarter, in Moscow even at 7.75%. To compare: In whole Europe - EU 27 the vacancy rate was at 6.76% in the first quarter and at 4.9% in Vienna.

The average rents have decreased slightly in Moscow, Prague and Warsaw in the recent months, whereas prime rents have increased continuously. In the center of Prague a prime rent of ─287 per sq m and per year is common, which states an increase of 10% in the first quarter of 2007. In the present experts assume that this upwards trend will not be detained in 2008. In Moscow prime rents have increased by 21% in the first quarter of 2008. The tendency is still upwards despite a lower demand of about 23%. In Moscow office prime rents of 1,266 Euro per sq m and year are common.

In no other European capital there is currently as much being constructed as in Moscow. About 3.7 mln sq m new office space are expected in the next two years in Moscow. To compare: In Paris Ile-de-France 1.968 million sq m new office space will be completed in the next 24 months.

Investors appreciate the stability factor in Austria. Especially German investors like the German Open-ended Funds acquire Austrian real estates reinforced in their portfolios-stated Dr. Andreas Ridder, Managing Director of CB Richard Ellis Austria at the Real Vienna Property Fair last week.

Especially the increasing lettings activities in Austria give reason for hope: from the fourth quarter 2007 to the first quarter 2008 the number of let areas increased by 10,000 sq m to 100,000 sq m.

The development of vacancy rate in Vienna is also favorable: it decreased in the first quarter 2008 from 5.2% to 4.9% and it is assumed to decrease further in the second quarter. This results from the increasing demand, especially in the area of larger, connected office spaces in Vienna and surrounding. Thus prime rents increased further this year and amount to ─22.5 /sq m/month currently with an upward tendency. Only the volume of completions underperformed with about 22,000 sq m and is the lowest since 2005.

High interest of the German Open-ended funds will continue and will have a positive impact on the second quarter 2008, animating the market. Dr. Andreas Ridder added: We expect stable lettings activities in Austria in the future, which will make us attractive and predictable for foreign investors. At the same time prime rents will increase after having been on the same level for so many years.

Forecasts for CEE markets are similarly optimistic, where interesting investment activities are expected to take place in summer and in autumn. Quality is the keyword for investments in real estates in CEE regions, confirms Dr. Ridder, who is also responsible for the whole CEE region. Quality refers to property as well as to location - and in real estates still count to the safest ones especially after having a look at the current developments of share prices.