The IPD Central and Eastern European Annual Property Index delivered a positive total return on all property of 5.6% in 2012, albeit 2% lower than the total return for 2011.
In common with other European countries, income return was the key component of performance, returning 6.8% although somewhat below its long-term trend of 7.0%, while capital growth stood at -1.1% for 2012.
'These returns indicate pressure of higher operating costs and increased vacancy rates, while negative capital growth in 2012 saw a reversal of the average capital appreciation, compared to what the CEE region experienced two years ago, standing at 0.9%,' said Nassos Manginas, managing director of IPD. 'It also demonstrates the continued economic uncertainty and fragile recovery of real estate markets.'
Looking at sector performance, a clear pattern of polarisation emerged in 2012, IPD said. Retail, which accounts for 42% of the overall value of the CEE databank, delivered a total return of 8.5%, while offices with a similar value weighting (40%) produced only 3.8%.
Industrial assets with a weight of less than 17% generated the lowest performance of 3.5%, Manginas noted: 'With income return broadly comparable among the three sectors, it was capital depreciation for offices and industrials that was the key factor in determining this gap in performance.'
The CEE databank includes Poland, the Czech Republic, Hungary and the rest of CEE with a total market capitalisation of €14.6 bn, 50 funds and 529 assets.PropertyEU's latest CEE Investment Briefing takes place in London on 26 April. Click here for more information and to register.