oncor 2004 - Sadolin & AlbÃ¦k

20 

04 

European Property Bulletin

Summary 

Introduction 

The ONCOR European Property Bulletin for 2004 monitors 

commercial property trends in over 60 city locations across 17 

countries. It uses the local expertise of the members of ONCOR 

International. 

The report reviews trends in rental values, yield levels and building 

costs during the course of 2003, and gives local experts’ views on 

the outlook for their markets. 

Weather symbols (sunny, partly sunny, rainbow, and thunderstorm) 

provide a pictorial guide to the prospects for each individual country. 

At a time when more countries are joining the European Union, this 

report truly allows for the direct comparison of information between 

countries. Once again, all of the rental information has been 

expressed in the same units of € per m 2 per annum. 

Prospects 

Country 

Belgium 

Czech Republic 

Denmark 

France 

Germany 

Hungary 

Market Climate 

Summary 

Rental growth 

2003 saw further, more widespread falls in rental values. 

With both the office and industrial sectors in decline. 

However, retail rents did improve overall. 

Particularly so in Italy - four out of the top five rises in retail 

rents were in Milan and Rome. 

Yield Movements 

There was further improvement in yields in 2003. 

In the office, retail, and industrial sectors, more cities 

experienced falling yields than rising ones. 

In fact, almost one half of all office and retail locations saw 

improved yields. 

And nearly three-quarters of industrial markets experienced 

static or falling yields. 

Building Costs 

Overall building costs rose by 0.8% in 2003. 

Increases were seen in the office and retail sectors. 

Ireland/Northern Ireland 

Italy 

Netherlands 

Norway 

Poland 

Portugal 

Russia 

Spain 

Switzerland Geneva 

Switzerland Zurich 

Turkey 

United Kingdom 

But costs fell on the industrial properties. 

Key 

Sunny: Market Peak. Supply and demand in 

approximate balance. Rents and values moving upwards. 

Yields moving downwards. 

Partly Sunny: Improving Market. Consistent demand. 

Unlimited costruction, early stages of increasing rents. 

Rainbow: 

stabilising. 

Market Trough. Rents, value and yields 

Compiled and edited by Nicola Albé and Cecilia Balzano. 

Summary and analysis undertaken and written by BW investor services Ltd, London. 

Created and printed by Giovanni Longiave for Oncor International, March 2004. 

Oncor International HQ in Chicago IL, USA and European HQ in Legnano (MI), Italy. 

Thunderstorm: Declining Market. Deteriorating conditions 

in economy or property markets. Oversupply with flat or 

declining rents, values falling. 

European Property Bulletin 2004 3

Analysis 

European Rent Index 

The following three graphs show the average sector rental indices 

for a sample of nine major European cities dating back to 1993. The 

graphs show that rents have grown in just one of the three main use 

sectors, while just falling in another, and continuing to decline in the 

third. 

130 

120 

Industrial 

During 2003, the retail sector was the only one to record rising rental 

values. It is true to say that the large upturn in rents shown on the 

graph is largely due to retail rent increases in the Italian city of Milan. 

However, it must also be stated that only one of the other none 

major cities (Amsterdam) experienced falling retail rents, and this 

trend was repeated throughout all of the European cities monitored 

here. After Milan, the two cities to experience the greatest growth in 

retail rents were Madrid (14.2%) and St. Petersburg (8.0%). Rents 

have now risen on this sample of cities since 1995. 

110 

100 

90 

80 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

Industrial rents fell for the first time since 1995 in 2003, falling in four 

of our nine cities, actually rising in three and remaining static in two. 

The city of Brussels (-10.4%) and Berlin (-10.0%) recorded the 

greatest falls. The other cities to experience falling industrial rents 

were Amsterdam and Paris. Industrial rents rose the most in Madrid 

(10.5%). 

In the office sector, rents in the Big Nine Cities fell by 8.9%, with 

seven of the nine cities recording declining values. This represents 

the biggest fall in office rents over our period of analysis. Paris and 

Frankfurt were the two markets where values fell the most (-23.5% 

and -15.3% respectively), although Madrid, London, and Berlin also 

all recorded double-digit declines in office rents. Rents were stable 

in 2003 in St. Petersburg and actually rose by 1.0% in Milan. 

140 

130 

Office 

Comparative Terms: November 1993=100 

Regional Office Trends 

Rental movements in the 18 countries have been monitored and 

these have been grouped into nine geographical regions. The 

European Office Rental Table at the end of this section gives full 

details of the regional coverage, but the following table summarises 

recent rental movements across the regions. 

Regional Office Rental Growth in 2003 

Benelux -2.5% 

Italy -5.5% 

France -4.0% 

East -2.2% 

Iberia -5.6% 

British Isles -3.1% 

Central -4.9% 

Turkey -4.5% 

Scandinavia -6.5% 

120 

110 

100 

90 

80 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

The immediate thing to note from the above table is that all of the 

nine regions have experienced falling office rental values in 2003. As 

in 2002, the worst performance was again to be found in 

Scandinavia, and rents fell in all four of the Danish and Norwegian 

cities that comprise this region. Italy and Iberia both recorded rental 

values falling by over 5%. The two regions where rents fell the least 

were Eastern (-2.2%) and Benelux (-2.5%). Office rents fell by 3.1% 

in the British Isles and by 4.0% in France. 

240 

220 

200 

180 

160 


Retail 

The Office Sector 

The West End of London once again commands the highest rental 

level of all of the city locations covered, followed by its neighbour 

the City of London at € 908.1 and € 688.6 per m 2 per annum 

respectively. The City of London was able to maintain its position of 

runner-up in these Top 15 cities despite the fall of 14.1% in rents 

that it experienced. Frankfurt was the city to experience the largest 

fall in its office rents, and it now ranks tenth in the Top 15 cities, 

falling from number seven in 2002. 

140 

120 

100 

80 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 


The following graph illustrates the Top 15 cities in terms of office 

rental values and shows their respective changes during 2003. It 

includes cities from seven countries; namely the UK, Switzerland, 

Russia, Italy, Ireland, Germany, and France. As in 2002, no Spanish 

cities have made it into the Top 15 list this year. 

The city which has gained the most in 2003 is Milan, moving up to 

the sixth position from 9th place in 2002. 

4 European Property Bulletin 2004

Analysis 

Office Yields 

1200 

1000 

-8.6% 

The Top 15 Office Locations (€ per m 2 pa) 

As the following table of the Big Nine Cities shows, there was a 

general trend towards some hardening in yields in 2003, reversing 

the trend seen in the preceding 12 months. Five of the cities saw 

some improvement in yields, while just two (Milan and Berlin) saw 

some deterioration. 

800 

600 

400 

200 

0 

London West End 

-14.1% 

-7.1% 

London City 

Paris (Triangle d'Or) 

0.3% 

-3.7% 

2.0% 

Moscow 

Dublin (Prime) 

Milan (C.Matteotti/V.Manzoni) 

-11.8% 

-6.0% 

Zurich 

Paris (La Défense) 

-7.9% 

-15.3% 

-10.4% 

-3.4% 

-11.1% 

Geneva 

Frankfurt 

Paris (Gare de Lyon) 

Edinburgh 

Rome (P.zza di Spagna/Babuino) 

Florence 

St. Petersburg 

-3.1% 

0.0% 

Yield Movement in the Big Nine Cities during 2003 

Actual Chge % 

Madrid -1.00 

Amsterdam -0.25 

Brussels -0.25 

Frankfurt -0.20 

London -0.15 

Paris -0.08 

St. Petersburg 0.00 

Milan 0.50 

Berlin 0.50 

The number of cities to have recorded a rise in rents in 2003 is again 

down on that of a year earlier. Rents increased in just eight cities, 

down from the number (12) where rents rose in 2002. Office rents fell 

in over one half of the cities (39 out of 61) and remained static on 14 

of the cities. 

40 

% change during 2003 

Change in Office Rents - Number of Locations 

2003 

Of all 63 city areas covered in this analysis, almost a half (49%) 

showed some improvement in yields, while 17% recorded yield 

rises, with the remaining 33% staying static. Overall, when changes 

across all 63 cities are considered, there was some inward 

movement during the year, with the median office yield moving from 

7% in 2002 to 6.75% in 2003. 

The greatest reductions in yields were in Russia and the Czech 

Republic, while Germany and Italy recorded some of the largest 

increases in yield over the year. 

35 

2002 

Change in Office Yields, 2002-2003 

30 

25 

20 

Number of City Locations % of Total 

Falls 31 49 

Static 21 33 

Rises 11 17 

Total 63 100% 

15 

2002 2003 

2002 

10 

5 

0 

2003 

Rises Static Falls 

Office Rental Change during 2003 

Top Five Increases % Top Five Falls % 

Belfast 7.6 Oslo -13.6 

Lille 7.1 London City -14.1 

Düsseldorf 4.9 Madrid (CBD) -14.5 

Prague 4.7 Frankfurt -15.3 

Stuttgart 2.9 Genoa -16.7 

The Retail Sector 

Retail rents grew by 11.0% in 2003, according to the indices for the 

Big Nine Cities in Europe. This growth is dominated by the city of 

Milan, where retail rents grew by 66.7% on average. 

After coming first last year, Frankfurt again showed strong rental 

growth in coming in fourth place with a rise of 7.3%. Madrid 

experienced an increase in its retail rents of 14.2%, making it 

second in this list of the Big Nine Cities. St. Petersburg and Berlin 

were the other cities to undergo growth in 2003, while rents 

remained flat in London, Brussels and Paris, and actually fell in 

Amsterdam (-0.8%). 

A trend of some recovery in retail rents might be suggested by the 

following graph. Although the number of cities experiencing growth 

has fallen in 2003, so has the number of cities where rents have 

decreased. 


Analysis 

Rent & Yield Movements in the Big Nine Cities during 2003 

Rental Growth % Actual Yield Chge % 

Milan 66.7 -1.50 

Madrid 14.2 -0.38 

St. Petersburg 8.0 -1.00 

Frankfurt 7.3 0.15 

Berlin 3.8 0.10 

London 0.0 -0.25 

Brussels 0.0 0.00 

Paris 0.0 -0.17 

Amsterdam -0.8 0.00 

Both of Milan's main retail locations featured in the following table in 

last year's European Property Bulletin. Both were among the Top 

Five Falls in 2002. It is then, very interesting to note how these two 

locations, along with two in Rome, now dominate the Top Five 

Increases in retail rents in 2003. Budapest also experienced some 

very strong retail rental growth in 2003. 

In terms of actual rental values, London dominates once again, 

although Paris’ Champs Elysées has now overtaken Oxford Street 

and New Bond Street to occupy the second position (although this 

can be attributed to movements in exchange rates). Having said 

this, four of the top six retail locations are still to be found in London. 

Knightsbridge commands the highest rent at € 7,307 per m 2 per 

annum, while retail space in the Champs Elysées goes for € 6,500 

per m 2 per annum. The following graph shows the Top 15 city 

locations in terms of rental value. Growth in rental values was not 

particularly widespread amongst these 15 cities. Only Dublin 

(19.8%) and Birmingham (3.2%) experienced any growth in retail 

rents (in local currency). Rental values fell in Edinburgh and Zurich, 

and remained static in the remaining 11 cities. 

For all of the city locations recorded and monitored in our analysis, 

retail rents grew by 9.8%. 

9000 

The Top 15 Retail Locations (€ per m 2 pa) 

8000 

0.0% 

40 

35 

30 

25 

Change in Retail Rents - Number of Locations 

2002 

2003 

2003 

7000 

6000 

5000 

4000 

3000 

2000 

0.0% 

0.0% 

0.0% 

19.8% 

0.0% 

3.2% 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

-4.7% 

-5.3% 

20 

1000 

15 

10 

5 

0 

2002 

2002 

2003 


0 

London (Oxford Street) 

London (New Bond Street) 

Dublin (Prime) 

London (Regent Street) 

London (Knightsbridge) 

Paris (Champs Elysées) 


Birmingham 

Manchester 

Belfast 

Leeds 

Paris (Les Halles) 

Glasgow 

Paris (Rue de Rivoli) 

Edinburgh 

Zurich 

There seems to be no such geographical concentration when it 

comes to the falling retail rental values in 2003, although two of the 

bottom five cities are to be found in the Netherlands. The remaining 

three cities can be found in Switzerland, Denmark, and the Czech 

Republic. 

Retail Yields 

The movement in retail yields was generally favourable in 2003, 

falling in 29 of the 62 locations, and rising in just 11. Retail yields 

remained stable in 35% of the cities covered. 

Retail Rental Change during 2003 


Milan (C. Vercelli) 87.5 Rotterdam -4.8 

Milan (V. Montenapoleone) 56.3 Maastricht -4.8 

Rome (V. Cola di Rienzo) 50.0 Zurich -5.3 

Rome (V. Condotti) 22.2 The Triangle Area -5.6 

Budapest 37.4 Prague -6.9 

Change in Retail Yields, 2002-2003 


Falls 29 47 

Static 22 35 

Rises 11 18 

Total 62 100% 


Analysis 

Of the Big Nine Cities, Milan, Madrid, St. Petersburg, London and 

Paris saw a yield improvement, while all other locations saw yields 

remain static or rise. 

250 

The Top 10 Industrial Locations (€ per m 2 pa) 

The Industrial Sector 

200 

0.0% 

Of the 55 cities covered, 15 recorded rises in rental values, nine 

showed no change, and 31 experienced falls. 

150 

100 

-1.6% 

3.7% 

-10.0% 

10.5% 

0.0% 

0.0% 

0.0% 

8.4% 

-5.3% 

30 

Change in Industrial Rents - Number of Locations 

2003 

50 

0 

25 

20 

2002 

2002 

London 

Paris 


Dublin 

Madrid 

Bristol 

Edinburgh 

Belfast 

Milan 

Rome 

15 

2003 

2002 


10 

5 

0 

2003 


Industrial Yields 

The median yield for the 56 cities stood at 8.8% at the end of 2003. 

In total, yields improved in 29% of the cities monitored, while 54% 

had yields remaining stable. Industrial yields increased in 18% of the 

cities monitored in our analysis. Of the Big Nine Cities, two (Madrid 

and Amsterdam) showed weakening yields, two (St. Petersburg and 

Brussels) showed an improvement, and the remaining five saw no 

change in yield. 

For all 55 cities, industrial rents fell by an average of 1.7% in 2003. 

Despite this, some cities did record some very positive industrial 

rental change during 2003. The following table shows the Top Five 

Increases, and it can be seen that four of these five cities 

experienced a rise in industrial rents that was in excess of 10%. The 

greatest growth was to be found in Montpellier (20.0%). On the 

downside, the cities that recorded the Top Five Falls in industrial 

rents, all saw rental values fall by over 10%, and the biggest decline 

was to be found in Utrecht at -14.1%. 

Industrial Rental Change during 2003 


Montpellier 20.0 Glasgow -10.3 

Warsaw 16.0 Brussels -10.4 

Prague 14.9 Dresden -11.1 

Madrid 10.5 Naples -12.5 

Barcelona 9.6 Utrecht -14.1 

In terms of overall rental value, London continues to command the 

highest industrial rent at € 183.0 per m 2 per annum. This puts 

London some way ahead of its nearest rivals in terms of industrial 

rents, Paris and St. Petersburg at € 120.0 and € 110.8 per m 2 per 

annum respectively. 

Change in Industrial Yields, 2002-2003 


Falls 16 29 

Static 30 54 

Rises 10 18 

Total 56 100% 


Building costs rose by 0.8% during 2003. The biggest increase in 

costs was on the retail properties at 1.6%, followed by the offices at 

1.5%. Building costs on industrial properties were actually reported 

to have fallen by 0.8% in 2003, although this is largely due to the 

large reduction in costs recorded in Switzerland. 

The country which registered the largest increase in building costs 

for retail property was Germany, where costs rose by 16.1%. 

Hungary, Spain, and Italy, also recorded significant rises in retail 

building costs over the last year. 

Russia experienced the highest growth in both office and industrial 

building costs (6.7% and 4.0% respectively). 

Belgium, Switzerland and Turkey were the only countries to 

experience falling building costs in all three sectors. 


Analysis 

Oncor Members in Europe 

Belgium 


Denmark 

France 

Germany 

Italy 

Netherlands 

Norway 

Poland 

Russia 

Spain 

Switzerland, Geneva 

Switzerland, Zurich 


Hugo Ceusters 

Beacon Property Solutions 

Sadolin & Albæk 

Soprec Immobilier d'Entreprises 

Dr. Lübke GmbH 

Gabetti per l'Impresa 

Boer Hartog Hooft 

DnB Naeringsmegling 

ONCOR 

Astera Ltd. 

Ferran 

PI Performance 

Kuoni Mueller & Partner 

Nelson Bakewell 

Oncor thanks the following who have also contributed 

Hungary 


Portugal 

Turkey 

Varpex Ltd. 

Osborne King 

Abacus Property 

Kuzey Bati 

Summary & Analysis 

BW investor services Ltd 

London, UK 

Oncor International 

European Representation Office 

Tel. +39 0331 45 39 81 

Fax +39 0331 59 06 62 

E-mail: nalbeoncor@tin.it 

Web: www.oncorintl.com 

Contact: Nicola Albé 

Every care has been exercised in the preparation of this booklet, 

but no responsibility can be accepted for any errors or omissions. 

© Oncor International, March 2004 

Produced by Oncor International. 

Created and printed in Italy by Giovanni Longiave. 


European Office Rental Tables 

Office Rents 

Office Yields 

2003 % Change* Actual 

Region €/m 2 /pa on 2002 2003 2002 Change 

BENELUX 

Antwerp (B) 140 0.0 6.75 7.00 -0.25 

Brussels (B) 255 2.0 8.00 8.50 -0.50 

Amsterdam (H) 300 -6.3 6.50 6.00 0.50 

Rotterdam (H) 165 -10.8 7.00 6.70 0.30 

The Hague (H) 190 0.0 7.00 6.70 0.30 

Utrecht (H) 225 0.0 7.00 6.70 0.30 

Regional Average 213 -2.5 7.04 6.93 0.11 

BRITISH ISLES 

Dublin (IRE) 500 -3.7 6.00 6.00 0.00 

Belfast (UK) 227 7.6 6.50 6.50 0.00 

Birmingham (UK) 321 0.0 6.50 6.75 -0.25 

Bristol (UK) 328 0.0 6.75 7.50 -0.75 

Edinburgh (UK) 428 -3.4 6.50 7.00 -0.50 

Glascow (UK) 336 -4.5 6.50 7.25 -0.75 

Leeds (UK) 284 -7.0 6.75 7.25 -0.50 

London (UK) 908 -8.6 5.90 6.25 -0.35 

Manchester (UK) 350 -8.2 6.50 6.75 -0.25 

Regional Average 409 -3.1 6.43 6.81 -0.37 

CENTRAL 

Berlin (D) 282 -11.3 5.40 5.50 -0.10 

Dresden (D) 120 -0.8 6.50 6.70 -0.20 

Dusseldorf (D) 258 4.9 5.20 5.50 -0.30 

Frankfurt (D) 432 -15.3 7.00 5.40 1.60 

Munich (D) 360 0.0 5.50 5.50 0.00 

Stuttgart (D) 210 2.9 5.50 5.50 0.00 

Geneva (S) 449 -7.9 5.50 5.60 -0.10 

Zurich (S) 481 -11.8 5.00 5.00 0.00 

Regional Average 324 -4.9 5.70 5.59 0.11 

EAST 

Prague (CK) 228 4.7 8.10 9.40 -1.30 

Budapest (HY) 168 -12.3 9.00 9.20 -0.20 

Warsaw (P) 237 -3.8 9.50 10.00 -0.50 

St. Petersburg (R) 388 0.0 18.00 18.00 0.00 

Moscow (R) 516 0.3 14.00 16.00 -2.00 


FRANCE 

Saint Denis (F) 250 -5.7 7.25 7.25 0.00 

Lille (F) 150 7.1 8.75 9.00 -0.25 

Lyon (F) 160 -13.5 8.50 8.50 0.00 

Marseilles (F) 168 0.0 8.75 8.75 0.00 

Montpellier (F) 129 0.0 9.50 9.50 0.00 

Bordeaux (F) 125 0.0 9.00 9.00 0.00 

Nice (F) 140 -12.5 9.00 9.00 0.00 

Paris (F) 650 -7.1 6.10 6.35 -0.25 


IBERIA 

Lisbon (PT) 228 -9.5 7.00 7.00 0.00 

Oporto (PT) 186 0.0 7.75 7.75 0.00 

Barcelona (SP) 267 -5.0 6.09 6.25 -0.16 

Madrid (SP) 325 -14.5 5.75 6.00 -0.25 

Valencia (SP) 109 0.9 6.50 6.75 -0.25 


ITALY 

Bologna (I) 200 -0.5 6.50 6.80 -0.30 

Florence (I) 400 -3.1 8.00 8.50 -0.50 

Genoa (I) 150 -16.7 7.50 7.50 0.00 

Milan (I) 500 2.0 6.00 6.50 -0.50 

Naples (I) 310 0.0 6.50 6.00 0.50 

Rome (I) 400 -11.1 6.50 6.00 0.50 

Turin (I) 150 -9.1 7.00 7.00 0.00 


SCANDINAVIA 

Copenaghen (DK) 225 -1.5 6.50 6.50 0.00 

Odense (DK) 111 -2.9 7.00 7.50 -0.50 

Bergen (N) 137 -8.0 8.25 8.50 -0.25 

Oslo (N) 226 -13.6 6.75 7.50 -0.75 


TURKEY 

Istanbul (T) 100 -4.5 12.30 12.00 0.30 

European Average 288 (1) -4.6 (1) 6.75 (2) 7.00 (2) -0.25 

Note: Rents and Yields are quoted for the prime locations in the areas listed. *% Change in local currency (1) Average af all locations (2) Median office yield 


Belgium 

Market Prospects 

Once again, the year 2003 was characterised by a market 

with weak take-up, due to the generally unfavourable 

economic conditions. This weak trend on the occupational 

market continues to be contradicted however by a very vigorous investment 

market, with many local and international investors being attracted by the 

overall stability of the Belgian real estate market. The office take-up in 

Brussels for 2003 is expected to be some 570,000 m 2 which is slightly better 

than the average annual take-up over the last 5 years (561,000 m 2 /year). Such 

a level of take-up would represent an increase of 20% from the figure of 

475,000 m 2 recorded in 2002. 

Office take-up in Brussels, is characterised as a market with two completely 

different characteristics: 

Rent Index 

140 

120 

Brussels 

1. Downtown Brussels (Quartier Léopold and CBD) which remains 

very strong due to the growing demand from European and 

Belgian institutions. 

2. The decentralised areas which have been suffering from the 

weaker economic condition in general, and more specifically from 

the decline of the internet, media and telecommunication industries. 

100 

80 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 

2003 

The office take-up in Antwerp, the second largest office market in Belgium 

has remained stable in 2003 with yields of below 7% being recorded on the 

investment market. This is due to the fact that Antwerp is one of the major 

world harbours with all its related industrial and logistical activities, and also 

to the fact that very major investments have been done in this city by the local 

and regional authorities. 

KEY Office Retail Industrial 

Comparative Terms: November 1993 = 100 

By Roland Cracco, Hugo Ceusters 

Costs € per m 2 Rents Yields % 

2002 2003 %Chge 2002 2003 Act. Chge 

Offices 

€ per m 2 pa 

Brussels (Quartier Léopold) 250.0 255.0 2.0 6.50/7.25 6.00/7.25 -0.25 

(Décentralisé) 150.0 145.0 -3.3 7.50/8.50 7.50/9.00 0.25 

Antwerp 140.0 140.0 0.0 8.00/9.00 6.80/9.00 -0.50 

Retail 


Brussels 1,115.5 1,115.5 0.0 6.50 6.50 0.00 

Antwerp 1,115.5 1,115.5 0.0 6.50 6.50 0.00 

Industrial 


Brussels 55.8 50.0 -10.4 8.50/10.00 8.00/10.00 -0.25 

Antwerp 44.6 45.0 0.9 9.00/10.00 8.00/10.00 -0.50 

Building Economic Data 2002 2003 

2002 2003 %Chge 

% % 

Offices 942.0 895.0 -5.0 Cost of Finance 2.9 2.2 

Shop unit 494.5 470.0 -5.0 Inflation 1.6 1.5 

Industrial 330.0 313.5 -5.0 GDP 0.7 0.8 

Occupation 

Leases: Leases are for a standard nine-year term, the landlord and tenant 

having an option to break every three years. The tenant has no automatic 

right to renew at the end of his lease, except in the case of shops, where 

he is entitled to three further nine-year periods. There is a general annual 

indexation of rents, with a possible rent review every three years. 

Additional Occupation Costs: Tenants are usually liable for internal 

repairs, insurance, and local and state taxes. Service charges for offices 

are about 12-25% of prime rents. Office occupiers in Brussels and its 19 

communes pay a regional tax in addition to the nominal real estate tax. 

Acquisition Costs: These are as follows: on new buildings, a registration 

duty of 10% on land value, 21% VAT on construction value; for secondhand 

buildings, a registration duty of 10% can be partly recovered (60% is 

recoverable if the property is sold within two years of acquisition). In both 

cases legal fees at 3% are payable on agents’ fees. (Registration duty of 

10% is only applicable in Flanders, in Wallonia it is 12.5%). 

Hugo Ceusters NV 

Frankrijklei 31-33 

2000 Antwerp, Belgium 

Tel: +32 3 231 88 76 

Fax: +32 3 234 32 71 

E-mail: roland.cracco@ceusters.be 

Web: www.ceusters.be 

Contact: Roland Cracco 




The Czech economy has continued its steady growth for the 

past several years. GDP in 2003 was 2.4%. 

The Czech Koruna continues to be stable against the Euro 

and Dollar in 2003, keeping rates in line with 2001 and 2002. The public 

voted in favour of the Czech Republic's accession into the European Union 

in June of 2003, while formal acceptance is scheduled for May of 2004. EU 

membership is projected to slowly stimulate the economy further in all 

market sectors over the next few years. 

The office market continues to show signs of stability with prime rents 

remaining constant (€ 17-19 m 2 per month) for the last 2 years. Demand is 

keeping pace with supply as nearly two-thirds of all completed, new-build 

space has been pre-let. 

Retail activity continues to expand as international retailers are entering 

the market on an increasing level. New downtown shopping areas are 

materializing due to the continuing ration of demand oversupply of quality 

locations. Public spending and confidence are increasing as well. 

Rent Index 

160 

140 

120 

100 

80 

60 

Prague 

The outlook for 2004 is continued growth in all property and financial 

sectors. 

By Michael Di Nicola, Beacon Property Solutions 

40 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 



Costs € per m 2 Rents Yields % 

2002 2003 %Chge 2002 2003 Act. Chge 

Offices 


Prague 217.8 228.0 4.7 8.60/10.00 7.50/8.70 -1.3 

Retail (High Street) € per m 2 pa 

Prague 876.5 816.0 -6.9 10.50 9.00/9.60 -1.0 

Industrial 


Prague 52.2 60.0 14.9 10.00/13.00 9.00/11.00 -1.5 

Building Economic Data 2002 2003 

2002 2003 %Chge 

% % 

Offices 674.9 674.9 0.0 Cost of Finance 2.5 2.0 

Shop unit 646.8 646.8 0.0 Inflation 1.8 0.1 

Industrial 357.9 357.9 0.0 GDP 2.0 2.5 

Occupation 

Leases: Terms vary from 3 to 10 years for offices, 5 to 10 for retail and 

more depending on location, other lease conditions and amenities, 

expansion possibilities, etc. Tenant usually can have renewal rights and/or 

extention options at the end of the term. 

Additional Occupation Costs: Average between € 2-5 per m 2 per month. 

Acquisition Costs: Agent's fees average from 10 to 15% of the first year's 

gross rent for leases, and between 2 and 4% of the purchase price for 

purchase/sales. 


Cermakova 7 

120 00 Prague 2, Czech Republic 

Tel: +420 225 341 341 

Fax: +420 225 341 340 

E-mail: bps@bpsoncor.cz 

Contact: Michael Di Nicola 


Denmark 


Although the Danish economy has been hit by the global 

economic downturn, the Danish property market has, under 

the circumstances, performed rather well. Furthermore 

fundamentals still seem rather strong. The general economic setback has, 

however, had an effect on the commercial property market. After years of 

low vacancy rates, brisk development activity and continued rental growth, 

the market has witnessed a slightly receding demand, growing vacancy 

rates, especially for secondary and suburban locations, and declining 

building activity. Moreover rent levels have come under pressure, which 

primarily have been recorded in secondary locations. 

Such a market offers good opportunities for occupiers, but substantial 

challenges for developers and investors. Developers in the market are 

undoubtedly facing a couple of tough years ahead, especially in the office 

sector. 

Nevertheless, the property investment market continues to show a great 

degree of stability. 

Property investments benefit from historical low interest rates and 

financing costs which have fuelled investor appetites, especially for 

properties let on long-term leases, and although prospects for growth in 

rents and values are limited at least in the short run, well-let commercial 

properties offer attractive initial returns with full indexation, and hence 

rather generous cash flows compared to other investment assets. Prime 

yields remain stable in all sectors, whereas there are indications of 

moderate increases in secondary yields, especially in the industrial sector. 

By René Kauland, Sadolin & Albæk 

Building Costs Per m 2 Rents Yields % 

2002 2003 %Chge 2002 2003 Act. Chge 

Offices Per m 2 pa € DKK € DKK 

Copenhagen 228.8 1,700.0 225.3 1,675.0 -1.5 6.50 6.50 0.00 

Arhus 148.1 1,100.0 148.0 1,100.0 0.0 7.00 6.75 -0.25 

Aalborg 127.9 950.0 121.1 900.0 -5.3 7.00 7.00 0.00 

The Triangle Area 117.8 875.0 114.3 850.0 -2.9 7.50 7.00 -0.50 

Odense 114.4 850.0 111.0 825.0 -2.9 7.50 7.00 -0.50 

Retail 

Per m 2 pa 

Copenhagen 1,480.6 11,000.0 1,479.5 11,000.0 0.0 5.80 5.75 -0.05 

Arhus 471.1 3,500.0 497.7 3,700.0 5.7 6.00 6.00 0.00 

Aalborg 376.9 2,800.0 376.6 2,800.0 0.0 6.50 6.50 0.00 

The Triangle Area 242.3 1,800.0 228.7 1,700.0 -5.6 6.75 6.50 -0.25 

Odense 376.9 2,800.0 376.6 2,800.0 0.0 6.50 6.75 0.25 

Industrial 

Per m 2 pa 

Copenhagen 74.0 550.0 70.6 525.0 -4.5 7.25 7.50 0.25 

Arhus 57.2 425.0 53.8 400.0 -5.9 7.75 7.75 0.00 

Aalborg 44.4 330.0 43.7 325.0 -1.5 8.25 8.25 0.00 

The Triangle Area 53.8 400.0 50.4 375.0 -6.3 8.00 8.00 0.00 

Odense 47.1 350.0 43.7 325.0 -7.1 8.00 8.25 0.25 

Economic Data 2002 2003 

2002 2003 %Chge 

% % 

Offices 1,487.3 11,050.0 1,519.9 11,300.0 2.3 Cost of Finance 2.9 2.2 

Shop unit 1,245.1 9,250.0 1,271.1 9,450.0 2.2 Inflation 2.4 2.1 

Industrial 774.0 5,750.0 790.2 5,875.0 2.2 GDP 1.1 0.6 


Denmark 

Occupation 

Rent Index 

Leases: Leases are normally agreed for a period of 5 or 10 years. After this 

period the lease continues, although, it may be terminated by the tenant 

with an agreed notice of tipically 6 or 12 months, whereas the landlord, 

only in special cases, is entitled to terminate the lease. The lease is 

indexed on an annual basis. Further to this, both parties may apply for a 

rent review every 4 years - upwards or downwards. 

Additional Occupation Costs: The tenant is responsible for internal 

repairs. On older properties rent usually includes property taxes, etc., but 

on new built-to-suit projects, the tenant normally pays all costs, excluding 

external building maintenance and property management. For a new office 

building at a prime location such additional occupation costs total up to 

DKK 400 per m 2 per annum. 

180 

160 

140 

Copenhagen 

Acquisition Costs: Stamp duty of 0.6% is paid by the vendor in East 

Denmark while in West Denmark, the stamp duty is split between the 

vendor and the purchaser. Legal fees paid by the purchaser are 

approximately 0.5% and agents' fees, usually paid by the vendor, are 

between 1.5% and 3.5% depending on the size of the transaction. 

120 

100 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 2003 

KEY 

Office Retail Industrial 



Nikolaj Plads 26 

1067 Copenhagen K, Denmark 

Tel: +45 33 11 66 55 

Fax: +45 33 32 72 96 

E-mail: sa@sa-oncor.dk 

Web: www.sadolin-albaek.dk 

Contact: Morten Schultz, Peter Frische 


France 


Letting activity slowed in the Parisian office market in 2002, 

and it is predicted that 2003's levels of take-up will be 

similar to those experienced in the previous 12 months, at 

approximately 1.5 million m 2 in the year. It is very interesting to note that 

almost one half of the space newly let this year was in larger units in central 

locations, bucking the trend of most cities, where there has been a 

concerted move towards the periphery. 

Rent Index 

180 

160 

Paris 

The development pipeline in Paris was effectively turned off very quickly as 

the economic slowdown became apparent, and this rapid response may 

well reap rewards in the future. This has had a significant impact on 

vacancy rate as, after doubling in 2002, 2003 has seen very little change 

in the amount of space available (6.3%) This means that Paris may well be 

able to prosper more quickly than its international rivals as any economic 

upturn starts to progress. Indeed, it is also suggested that Paris will benefit 

from a positive influx of new companies locating in the city. 

Rental values have dropped by 10% since December 2002 but are now 

stable, and it is expected that rents will have risen by the end of 2004. 

While things have been tougher in the occupational market, on the 

investment side however, investors are still very confident and are now 

considering speculative developments. This market has been very strong 

since 2002 and its volume has slightly increased during the 1st half of 2003 

with yields remaining at the same level. 

140 

120 

100 

80 

60 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 



By Pierre Peberay, Soprec Immobilier d'Entreprises 

€ per m 2 Rents Yields % 

2002 2003 %Chge 2002 2003 Act. Chge 

Offices 


Paris (Triangle d'Or) 700.0 650.0 -7.1 6.35 6.10 -0.25 

(La Défense) 500.0 470.0 -6.0 6.85 6.85 0.00 

(Gare de Lyon) 480.0 430.0 -10.4 7.00 6.80 -0.20 

(Seine rive gauche) 450.0 420.0 -6.7 6.80 6.80 0.00 

Saint Denis 265.0 250.0 -5.7 7.25 7.25 0.00 

Lille 140.0 150.0 7.1 9.00 8.75 -0.25 

Lyon 185.0 160.0 -13.5 8.50 8.50 0.00 

Marseilles 168.0 168.0 0.0 8.75 8.75 0.00 

Bordeaux 125.0 125.0 0.0 9.00 9.00 0.00 

Nice 160.0 140.0 -12.5 9.00 9.00 0.00 

Toulouse 125.0 125.0 0.0 9.00 9.00 0.00 

Montpellier 129.0 129.0 0.0 9.50 9.50 0.00 

Retail 


Paris (Champs Elysées) 6,500.0 6,500.0 0.0 6.80 6.50 -0.30 

(Rue de Rivoli) 3,250.0 3,250.0 0.0 7.20 7.00 -0.20 

(Les Halles) 3,800.0 3,800.0 0.0 7.50 7.50 0.00 

Industrial 


Paris 122.0 120.0 -1.6 9.00 9.00 0.00 

Lille 59.0 60.0 1.7 10.50 10.50 0.00 

Lyon 71.0 70.0 -1.4 10.00 10.00 0.00 

Marseilles 65.0 60.0 -7.7 9.50 9.50 0.00 

Bordeaux 60.0 60.0 0.0 11.00 11.00 0.00 

Nice 67.0 65.0 -3.0 10.00 10.00 0.00 

Toulouse 50.0 50.0 0.0 11.00 11.00 0.00 

Montpellier 50.0 60.0 20.0 11.00 10.50 -0.50 



(Paris area) 

2002 2003 %Chge 

% % 

Offices 1,580.0 1,580.0 0.0 Cost of Finance 2.9 2.2 

Shop unit 1,500.0 1,500.0 0.0 Inflation 2.0 1.6 



France 

Occupation 

Leases: Standard leases are for a minimum of 9 years, tenants usually 

being entitled to terminate the lease at the end of every 3 year period. They 

have security of tenure and are entitled to the renewal of the lease. Open 

market reviews occur at the end of the lease for offices, for retail only if the 

initial duration of the lease is above 9 years. Indexation of rent is based on 

the construction index. 

Additional Occupation Costs: Tenants are usually liable for internal 

repairs, insurance, local taxes and management. Service charges are 

generally between 10% and 15% of the rent and are passed on to tenants. 

VAT at 19.6% may be applied to rent and service charges. 

Acquisition Costs: Costs are 6% including transfer tax and notary’s fees. 

If the property is less than 5 years old and is being transferred for the 1st 

time, acquisition costs are VAT at 19.6% plus transfer tax and notary fees 

estimated at 1.5%. 

Yields 

%12 

%10 

%8 

%6 

Paris 

%4 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 


Big Three 

140 

Office Rent Index 

120 

100 

80 

60 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

KEY London Paris Frankfurt 


Soprec Immobilier d'Entreprises 

29, Rue de Lisbonne 

75008 Paris, France 

Tel: +33 1 56 69 80 00 

Fax: +33 1 56 69 80 07 

E-mail: info@soprec.fr 

Web: www.soprec.fr 

Contact: Pierre Peberay 


Germany 


There has been no genuine recovery in the German office 

market in 2003. In the course of the year, the German 

economy received few stimuli, and so Gross Domestic 

Product grew by just 0.1% in 2003. For 2004, GDP is expected to grow by 

1.5%. As the number of people in work continues to fall, it is reckoned that 

office markets will only begin to recover half way through 2005. 

In most of the German office markets, take-up of office space in 2003 has 

been down on the previous year. However, the extent of this decline is 

smaller than the fall in take-up that occurred from 2001 to 2002. The rates 

of take-up recorded in the major office markets of Düsseldorf (-21%), 

Berlin (-18%), Munich (-18%) and Frankfurt (-13%) are much lower than 

they had been in the previous year. Only the Stuttgart office market (+5%) 

reported a slight increase in space take-up. 

Rent Index 

140 

120 

100 

Frankfurt 

During 2003 the vacancy rate in some cities has risen dramatically. 

Vacancies in Düsseldorf almost doubled to reach a vacancy rate of 11% 

(+4.5 percentage points). In the course of one year, the vacancy rate in 

Frankfurt has advanced from approximately 8% to more than 10%. The 

Munich office market, which in late 2001 was still able to report the lowest 

vacancy rates (under 2%), has now reached around 7%. During 2003, it 

was mainly newly constructed office space which came onto the market, 

while sub-letting space became less important as the period outstanding 

on rent agreements grew shorter. New office space is increasingly being 

offered with incentives. Hence actual effective rents are significantly lower 

than the headline rents. During 2003, prime rents in most locations have 

fallen, with Frankfurt (-15%) and Berlin (-11%) reporting the highest rate of 

decline. 

80 

60 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 



The reforms which are currently being debated in Germany are intended to 

stimulate an upturn in the economy and it is hoped that this will also have 

a positive impact on the property market. In the interest of risk 

diversification, the investment market is increasingly turning towards other 

products and this is benefiting the retail property sector in particular. 

By Christof Scholl, Dr. Lübke GmbH 

Yields 

Big Three 

Frankfurt 


%12 

140 

%10 

120 

%8 

100 

%6 

80 

%4 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 2003 

60 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

KEY 

Office 

Retail 

Industrial 




Germany 

Building Costs € per m 2 Rents Yields % 

2002 2003 %Chge 2002 2003 Act. Chge 

Offices 


Berlin 318.0 282.0 -11.3 5.50 5.40 -0.10 

Frankfurt 510.0 432.0 -15.3 5.40 7.00 1.60 

Dresden 121.0 120.0 -0.8 6.70 6.50 -0.20 

Düsseldorf 246.0 258.0 4.9 5.50 5.20 -0.30 

Munich 360.0 360.0 0.0 5.50 5.50 0.00 

Stuttgart 204.0 210.0 2.9 5.50 5.50 0.00 

Retail 


Berlin 1,860.0 1,930.0 3.8 6.00 6.10 0.10 

Frankfurt 1,800.0 1,932.0 7.3 5.25 5.40 0.15 

Dresden 766.0 810.0 5.7 6.40 6.00 -0.40 

Düsseldorf 1,512.0 1,770.0 17.1 5.30 5.50 0.20 

Munich 2,280.0 2,436.0 6.8 5.00 5.00 0.00 

Stuttgart 1,602.0 1,824.0 13.9 5.25 5.50 0.25 

Industrial 


Berlin 60.0 54.0 -10.0 9.00 9.00 0.00 

Frankfurt 84.0 84.0 0.0 8.00 8.00 0.00 

Dresden 54.0 48.0 -11.1 10.50 11.00 0.50 

Düsseldorf 66.0 66.0 0.0 8.50 8.00 -0.50 

Munich 69.0 72.0 4.3 8.00 8.00 0.00 

Stuttgart 66.0 60.0 -9.1 8.50 8.50 0.00 

It is very difficult to establish a yield for shops in Germany as there are practically no shops under individual ownership; they are included in buildings where the yield is composed of office, 

residential and commercial rents. 


2002 2003 %Chge 

% % 



Industrial 620.0 550.0 -11.3 GDP 0.2 0.3 

Occupation 

Leases: These are normally for five to ten years with the option to renew 

for another term, although there is a strong tendency towards five-year 

leases. Rents are increased in line with the cost of living index. 

Additional Occupation Costs: The tenant is only responsible for internal 

repairs and all building management costs such as heating, cleaning, 

administration etc. This usually amounts to € 1.5-3 m 2 /month for offices. 

Acquisition Costs: These consist of transfer tax at 3.5%, registration duty 

and legal fees at 1-1.5%, agents' fees at 3-6% plus VAT at 16%. For 

leases, the tenant has to pay a fee of three month's rent. Nevertheless, it 

is becoming more usual for the landlord to pay this fee. 


Gutleutstrasse 82 

D-60329 Frankfurt, Germany 

Tel: +49 69 99 99 13 45 

Fax: +49 69 99 99 13 41 

E-mail: christof.scholl@dr-luebke.com 

Web: www.dr-luebke.com 

Contact: Christof Scholl 


Hungary 


2003 has seen some reduction in the over supply of office 

space, due to the combination of a moderate increase in 

demand and a fall in the number of speculative 

development projects. Developers often postpone the start of construction 

if they have yet to find a suitable tenant. It is not expected that any 

speculative development will be started until 2005. 

The market outlook for warehousing remains favourable and further growth 

may be expected in demand. This is primarily justified by the need for new 

distribution centres, which is a consequence of the shift in European 

Union’s borders. 

Rent Index 

140 

120 

100 

Budapest 

There has been a decline in the growth of shopping malls, as this sector of 

the market has now become over saturated. No new shopping mall 

projects were initiated in the first six months of 2003. 

In the investment market, there is a shortage of high quality properties with 

values of between € 30 and € 60 million. Such properties, available under 

long-term lease contracts are scarce, but they can offer the returns that are 

expected by investors. 

80 

60 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

A sign of the maturity of the Hungarian real estate market is that recently 

there was a substantial increase in the number and size of the property 

investment funds. 



By Ingeborg Kistamas, Varpex Ltd. 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices Per m 2 pa € DM € DM 

Budapest 192.0 375.5 168.0 329.2 -12.3 9.20 9.00 -0.20 

Retail 

Per m 2 pa 

Budapest 420.0 821.4 576.0 1,129.0 37.4 10.00 10.60 0.60 

Industrial 

Per m 2 pa 

Budapest 60.0 117.3 60.0 117.3 0.0 11.30 10.80 -0.50 


2002 2003 %Chge 

% % 

Offices 875.8 1,713.0 923.0 1,809.0 5.6 Cost of Finance 8.4 9.4 

Shop unit 599.4 1,172.3 648.0 1,270.0 8.3 Inflation 5.3 5.1 

Industrial 475.0 929.2 492.0 964.3 3.8 GDP 3.3 2.8 

Occupation 

Leases: Leases are normally from three to five years with the option to 

renew for another term. Seven-ten year lease contracts are getting more 

common. 

Additional Occupation Costs: Costs amount to an average of € 2.5-3.5. 

Acquisition Costs: Transfer tax for business property: 10%; agents’ fees: 

2-3% (for leases 3 month’s net rent); legal fees: 1-1.5%; VAT: 25% 

Varpex Ltd. 

Csillaghegyi Street 13 

H-1037 Budapest, Hungary 

Tel: +36 1 453 6000 

Fax: +36 1 453 6005 

E-mail: ingeborg.kistamas@varpex.hu 

Web: www.varpex.hu 

Contact: Ingeborg Kistamas 

Oncor International thanks Varpex for providing information about its market. 


Ireland 


Dublin: The retail sector has been particularly buoyant in 

2003, and with economic conditions improving, retailers are 

anticipating a busy Christmas period. Retail is again 

expected to retain its position as the best performing sector within the Irish 

commercial property market. 

In line with other European Capital cities prime office rents in Dublin have 

declined. Also, substantial tenant incentives exist in the form of rent free 

periods and other financial concessions. Take-up levels, while relatively 

healthy, have been due to companies taking advantage of the relative 

"value" on offer in the market rather than corporate expansion and 

relocation. 

The industrial market, currently in a period of recovery, is slowly regaining 

confidence. The outlook for the year ahead is one of cautious optimism, 

with industrial rents and capital values remaining stable. 

Rent Index 

300 

250 

200 

150 

Dublin 

Improving economic conditions and a eurozone interest rate of 2% 

continue to underpin strong demand for commercial property investments. 

In recent months strong demand for investments coupled with restricted 

supply has resulted in yields contracting and improving capital values. 

Prime yields reflect 5.75% (office) and 3.85% (retail). 

Belfast: 2003 has seen all sectors of the commercial property market 

mirror the performance of 2002, buoyed by a number of large retail 

schemes nearing completion and major city centre office lettings being 

secured. Low interest rates have again maintained a healthy status within 

the investment sector, with an ever increasing number of Irish investors 

looking towards the Mainland for higher yielding product. 

100 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 



There have been some significant developments within the retail sector. 

Demand remains high from retailers for larger sized units, with large 

premiums being paid for units located on the prime retail pitch of Donegall 

Place. 

The office market has received a welcome boost in the third quarter of 

2003, with the relocation of Governmental Departments from the Victoria 

Square area. Overall, rental levels are recovering from 2002 with some 

growth also being experienced. Rents typically reflect £ 12.00 per sq ft. 

The industrial market continues to perform steadily, with interest being 

driven by distribution companies and potential owner occupiers, again a 

direct result of low interest rates. 

The year ahead will no doubt be challenging, and with the abolishment of 

vacant property tax relief in 2004 now a reality, it may discourage 

speculative development of large office schemes. 

By Ian Duddy, Osborne King 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices 


Dublin - Prime 519.0 500.0 -3.7 6.00 6.00 0.00 

Retail 

€ per m 2 Zone A pa 

Dublin - Prime 5,260.0 6,300.0 19.8 3.50 3.50 0.00 

Industrial 


Dublin 120.0 108.0 -10.0 7.00 7.00 0.00 


2002 2003 %Chge 

% % 





Northen Ireland 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices Per m 2 pa € £ € £ 

Belfast 222.9 145.0 227.0 156.0 7.6 6.50 6.50 0.00 

Retail 

Per m 2 Zone A pa 

Belfast - Prime 4,135.3 2,690.0 4,153.3 2,690.0 0.0 5.50 5.25 -0.25 

Industrial 

Per m 2 pa 

Belfast 90.7 59.0 90.7 59.0 0.0 7.25 7.25 0.00 


2002 2003 %Chge 

% % 

Offices 1,494.3 972.0 1,494.3 972.0 0.0 Cost of Finance 3.9 3.9 

Shop unit 907.0 590.0 907.0 590.0 0.0 Inflation 2.2 2.0 


Occupation 

Leases: A tenant gains statutory rights after 2 consecutive 9 month 

License Agreements (Northern Ireland), with the minimum period for 

establishing renewal rights being 5 years continuous occupation in the 

Republic of Ireland. Standard lease terms are 15 years, with upward only 

rent reviews every 5 years. 

Additional Occupation Costs: Tenants are usually responsible for both 

structural and internal repairs, insurance and local taxes. Service charges 

are between 15-25% of prime rents. Rates (local taxes) are approximately 

30-40% of rents. 

Acquisition Costs: These are 5.75% in Northern Ireland and consist of 

agents' fees at 1%, legal fees at 0.75% and stamp duty at 4% on 

purchasers over £ 500,000. Acquisition costs are 8.42% on the Republic 

of Ireland. 

Osborne King 

Lindsay House 

10 Callendar Street 

Belfast BT1 5EN, Ireland 

Tel: +44 28 90 27 00 00 

Fax: +44 28 90 27 00 11 

E-mail: ian.duddy@osborneking.com 

Web: www.osborneking.com 

Contact: Ian Duddy 

Oncor International thanks Osborne King for providing information about its market. 


Italy 


In line with the general economic climate of the country, the 

Italian property market appears to be going through 

something of a slowdown. Apart from the industrial 

warehouse sector, which is particularly dynamic in most of the large and 

medium-sized cities as well as the retail sector in prime locations, the other 

sectors of the property market are not performing as positively. 

Although there has been a general increase in the supply of office buildings 

this has not been matched by overall demand, which is decreasing. This 

situation reflects the difficulty being faced by certain sectors of the 

economy (for example, the ICT sector), which is forcing many companies 

to rethink their underlying strategies, and property needs. The demand for 

good quality office properties (Grade A) remains upbeat, but as a result of 

the increasing imbalance between demand and supply, the impact on 

property values has resulted in the following situation: prices and rents for 

office property are tending to decrease (Grade B and C), or at least remain 

stable (Grade A). 

Rent Index 

120 

100 

80 

60 

40 

Milan 

In the commercial retail property market, the large-scale organised 

distribution sector is rapidly expanding. Just as dynamic is the retail sector 

in prime locations, with Milan and Rome being the most active, and where 

rents are rapidly increasing. However, the retail property sector is still 

conditioned by the economic crisis experienced by small companies and 

the decrease in consumer spending. Except for prime locations, the smallscale 

local distribution sector is experiencing negative activity at all levels. 

20 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 



The overall trends of the industrial property market are positive, especially 

those relative to the logistics sector, which continues to maintain high yield 

levels (between 8.5-10%). As already noted, over the last few years, there 

has been an increase in demand for modern industrial warehouses (with 

flexible structures) in all of the major cities. 

No change in the general situation is expected in the short term. Forecasts 

for 2004 indicate a confirmation of the current situation in a general 

climate, which will tend to link the property market to the trends of the 

general economic situation. 

By Dario De Simone, Gabetti per l'Impresa 

Yields 

Italian Office Rent Index 

Milan 

Italian Office Comparison 

%12 

120 

%10 

100 

%8 

80 

%6 

60 

%4 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 

2003 

40 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 


KEY Rome Milan Turin 



Italy 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices 


Milan (C.so Matteotti/V. Manzoni) 490.0 500.0 2.0 6.50 6.00 -0.50 

(I o Ring Road) 385.0 385.0 0.0 6.70 6.70 0.00 

Rome (P. di Spagna/V. del Babuino) 450.0 400.0 -11.1 6.00 6.50 0.50 

(Eur) 300.0 280.0 -6.7 6.50 6.80 0.30 

Turin 165.0 150.0 -9.1 7.00 7.00 0.00 

Genoa 180.0 150.0 -16.7 7.50 7.50 0.00 

Florence 413.0 400.0 -3.1 8.50 8.00 -0.50 

Bologna 201.0 200.0 -0.5 6.80 6.50 -0.30 

Naples 310.0 310.0 0.0 6.00 6.50 0.50 

Bari 171.0 175.0 2.3 7.50 7.50 0.00 

Retail 


Milan (Via Montenapoleone) 1,600.0 2,500.0 56.3 6.50 5.00 -1.50 

(C.so Vercelli) 800.0 1,500.0 87.5 7.00 5.50 -1.50 

Rome (Via Condotti) 1,800.0 2,200.0 22.2 6.50 6.00 -0.50 

(Via Cola di Rienzo) 800.0 1,200.0 50.0 7.00 6.50 -0.50 

Turin 620.0 620.0 0.0 8.00 8.00 0.00 

Genoa 568.0 650.0 14.4 8.00 8.00 0.00 

Florence 930.0 930.0 0.0 9.80 9.00 -0.80 

Bologna 671.0 700.0 4.3 8.50 8.50 0.00 

Naples 878.0 870.0 -0.9 7.30 7.00 -0.30 

Bari 826.0 800.0 -3.1 8.00 8.00 0.00 

Industrial 


Milan (hinterland) 83.0 90.0 8.4 9.50 9.50 0.00 

Rome 95.0 90.0 -5.3 9.00 9.00 0.00 

Turin 50.0 48.0 -4.0 8.50 8.50 0.00 

Genoa 72.0 75.0 4.2 8.50 8.50 0.00 

Florence 77.0 75.0 -2.6 9.00 9.00 0.00 

Bologna 72.0 70.0 -2.8 9.00 9.00 0.00 

Naples 80.0 70.0 -12.5 10.50 10.00 -0.50 

Bari 75.0 75.0 0.0 9.50 9.50 0.00 


2002 2003 %Chge 

% % 

Offices 

1,072.0 1,114.0 3.9 Cost of Finance 2.9 2.2 



Occupation 

Leases: Leases are usually for six years, the tenant having the right to 

renew for a further six years. Rents are increased by 75% of retail price 

inflation. There is a 2% registration tax on rent, the landlord and tenant 

paying 1% each. 

Additional Occupation Costs: Tenants are usually responsible for internal 

repairs only. Service charges for offices are 10-15% of prime rents. 

Acquisition Costs: Property sales are alternatively subject to VAT or 

registration fees. In sales made by private companies, the transfer of 

commercial properties is subject to VAT, which may vary anywhere from 

10% to 20%, as the case may be. There is also the registration fee, at a 

fixed rate of € 129 in addition to the mortgage tax and cadastral duty 

(€ 129 each). 

In the case of transfers on the part of private individuals, as VAT is not 

applicable, registration tax may vary from 3 to 7%, and is added to the 

mortgage tax (+2%) and cadastral duty (+1%). 

In any case, real estate brokerage fees amount to 2-5% plus VAT (20%) on 

the sale price. For rentals, fees are usually 10% plus VAT (20%) on the 

yearly rent. 


Via Ugo Bassi, 4/B 

20159 Milan, Italy 

Tel: +39 02 77 55 238 

Fax: +39 002 77 55 623 

E-mail: jcardoso@gabetti.it 

Web: www.gabetti.it 

Contact: Josephine Cardoso 


Netherlands 


Economic indicators suggest that the world economy will 

show some recovery in the second half of this year. The 

economic growth is expected to be a modest 1%, and the 

international revival may allow the Dutch economy to force itself out of 

recession. 

The business community will lose market share because of the 

strengthening Euro as well as the extensive increase in labour costs over 

the last few years. The rising costs of social services tend to limit domestic 

spending, and the low growth in production will cause an increase in 

unemployment. Inflation is expected to fall. 

After a period of a rocketing supply in office space at the same time as a 

sharp decrease in demand, both sides now seem to have stabilised. 

Nevertheless it is not yet possible to speak of a recovery. This is 

particularly the case in the West of the country where supply considerably 

exceeds demand. 

Rent Index 

200 

150 

100 

Amsterdam 

There is also in oversupply issue in terms of industrial space. Many 

companies are downscaling and are therefore looking for smaller spaces. 

50 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

Furthermore, a lot of lettable floor space was developed and acquired by 

professional investors. Therefore, many companies are moving and their 

older spaces are now vacant and adding to the empty stocks of property 

available on the market. 



The retail market does not seem to be as adversely affected by the low 

economic growth. On one side, retail revenues have been down, however 

this does not seem to be resulting in any considerable increase in retail 

vacancy levels. 

By Robert Das, Boer Hartog Hooft 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices 


Amsterdam (South Axis) 320.0 300.0 -6.3 6.00 6.50 0.50 

The Hague 190.0 190.0 0.0 6.70 7.00 0.30 

Rotterdam 185.0 165.0 -10.8 6.70 7.00 0.30 

Utrecht 225.0 225.0 0.0 6.70 7.00 0.30 

Retail 


Amsterdam (P.C. Hooftstraat) 800.0 800.0 0.0 6.10 6.10 0.00 

(Leidsestraat) 810.0 810.0 0.0 5.90 5.90 0.00 

(Kalverstraat) 1,640.0 1,600.0 -2.4 5.75 5.75 0.00 

The Hague 910.0 950.0 4.4 6.10 6.10 0.00 

Rotterdam 1,050.0 1,000.0 -4.8 6.10 6.10 0.00 

Utrecht 1,000.0 1,050.0 5.0 6.10 6.10 0.00 

Maastricht 1,050.0 1,000.0 -4.8 6.10 6.10 0.00 

Industrial 


Amsterdam 68.0 65.0 -4.4 8.00 8.25 0.25 

The Hague 68.0 65.0 -4.4 8.25 8.50 0.25 

Rotterdam 64.0 60.0 -6.3 8.00 8.25 0.25 

Utrecht 64.0 55.0 -14.1 8.25 8.50 0.25 


2002 2003 %Chge 

% % 



Industrial 460.0 462.0 0.4 GDP 0.3 -0.4 


Netherlands 

Occupation 

Leases: Leases are usually for five or ten years, the tenant having the 

option to renew for a further five years. Rents are indexed annually and 

there is an open market rent review at the end of the initial term. 

Additional Occupation Costs: Tenants are usually responsible for smaller 

internal repairs, one third of the property tax and a variable proportion of 

local taxes. Service charges for offices vary from approx. € 15-35 per m 2 

per annum. 

Acquisition Costs: Acquisition costs amount to approx. 8.5%, consisting 

of transfer tax at 6%, legal fees at 5%, agents' fees at 1.25-2.25% on 

purchases (or up to 17% of the initial rent in the case of leases), plus VAT 

at 19% on the fees. 

Yields 

%9 

%8 

%7 

Amsterdam 

%6 

%5 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 


Rent Index 

180 

Amsterdam Offices Comparison 

160 

140 

120 

100 

80 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

KEY Amsterdam Berlin Brussels 



Buitenveldertselaan 5, Postbus 75168 

1070 AD Amsterdam, Netherlands 

Tel: +31 20 540 5520 

Fax: +31 20 644 7166 

E-mail: bogmak@bhh.nl 

Web: www.bhh.nl 

Contact: Robert Das 


Norway 


In the first half of year 2003 we experienced a continued 

decline in the Norwegian property market. Vacancies in the 

Oslo office market continued to increase, and rental prices 

fell further. The uncertainty in the letting market had a negative impact on 

the investment market, and there were relatively few transactions taking 

place. 

During the summer months there was a shift in sentiment in both the letting 

market and the investment market. Due to a much more aggressive 

monetary policy from the Central Bank of Norway, the short term interest 

rate has been cut several times this year. From December 2002 to 

December 2003 the 3 months NIBOR rate has been reduced from approx. 

7.0% to approx. 2.8%. 

Rent Index 

150 

100 

Oslo 

In the second half of the year the effect of the lower interest rates have 

been seen in a number of ways. Private consumption is rising, prices in the 

housing market are increasing again, consumer confidence is improving, 

and employment figures are rising. In the letting market there has been 

much more activity in the last six months, and the increase in vacancies 

has levelled out. It is our view that vacancies will not rise above the present 

level of approximately 11% in the greater Oslo market. It is not anticipated 

that there will be further decline in rental prices. 

The investment market has also been much more positive in the second 

half of the year, and activity has increased. There has been a marked shift 

in the yield level for quality projects with long term leases and solid tenants 

- down from approx. 7.5% in first half of the year to approx. 6.75% today. 

There have been a number of transactions with a volume in the range of 

€ 40-60 million. The liquidity in the market has improved significantly. For 

the first time, a large international real estate fund recently made a large 

investment in Norway - as part of Nordea's nordic real estate portfolio. 

50 

2001 

2002 2003 



By Odd R. Bakke, DnB Næringsmegling 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices Per m 2 pa € NOK € NOK 

Oslo 302.3 2,200.0 225.8 1,900.0 -13.6 7.50 6.75 -0.75 

Bergen 171.8 1,250.0 136.7 1,150.0 -8.0 8.50 8.25 -0.25 

Retail 

Per m 2 pa 

Oslo 1,099.2 8,000.0 1,010.2 8,500.0 6.3 8.00 7.50 -0.50 

Bergen 549.6 4,000.0 475.4 4,000.0 0.0 9.00 9.00 0.00 

Industrial 

Per m 2 pa 

Oslo 103.1 750.0 83.2 700.0 -6.7 9.50 9.25 -0.25 

Bergen 68.7 500.0 53.5 450.0 -10.0 10.00 10.00 0.00 


2002 2003 %Chge 

% % 



Industrial 1,030.5 7,500.0 891.4 7,500.0 0.0 GDP 1.3 2.0 

Occupation 

Leases: Leases are normally agreed for a period of 5 or 10 years with 

option from the tenant to extend the lease period with 5 or 10 years on new 

conditions. The lease is indexed on an annual basis. 

Additional Occupation Costs: The tenant is responsible for internal 

repairs, while owners have the responsibility for structural and outside 

repairs, insurance and local taxes. 

Acquisition Costs: Transferring a property will provide a stamp duty of 

2.5%. This is normally paid by the purchaser in addition to his or her own 

legal fees. The vendor has to pay agents' and their own legal fees plus VAT, 

normally a total of 1-2% of purchase price. 

DnB Næringsmegling As 

Stranden 21, D4 

0021 Oslo, Norway 

Tel: +47 22 94 86 60 

Fax: +47 22 94 86 63 

E-mail: odd.bakke@dnb.no 

Web: www.dnb.no/naringsmegling 

Contact: Odd R. Bakke 


Poland 


After three years of economic slowdown, the Polish economy 

is now slowly starting to recover. This recovery seems to be 

consumer driven, although an increase in exports has also 

had a positive effect. Poland will be joining the European Union in May of 

2004, and it is predicted that this will result in an improvement in the business 

climate in general. Many international companies are expected to locate 

offices in Warsaw and to establish a presence in Poland. 

Rent Index 

120 

100 

Warsaw 

On the occupational side, the Warsaw office market is characterised by 

conditions of oversupply and high vacancy rates of approximately 18%. 

There has also been a slowing down in take-up, coupled with falling rents. 

Landlords have had to lower their expectations and are having to offer some 

significant incentives to prospective tenants. Consequently, there is now a 

widening gap between headline rents and net effective rents. These problems 

should be easing though, as the development pipeline has been turned down 

and there has been little new supply in the last two years. 

The Investment market had an excellent year in 2002, and this has continued 

throughout 2003, with provincial centres outside of Warsaw benefiting for the 

first time. 

Looking at the retail market, it has been already mentioned that the 

combination of a gradually improving economy and impending EU 

membership appears to be encouraging new retailers to enter the market, 

and demand from consumers is on the rise. As far as rents are concerned, 

high street tends to be higher than shopping centres due to the limited supply 

of prime units in city centre locations. 

80 

60 

40 

20 

0 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 



Approximately 85% of the newly constructed industrial space is located in the 

Greater Warsaw area. In 2001 and 2002, take-up of such space exceeded 

new supply, and similar levels are expected for 2003. However, more recent 

times have seen a shift in focus away from the urban sites to out-of-town 

locations. No doubt boosted by the improving retail sector, logistic and 

distribution centres have been much sought after, in spite of Poland's as yet 

insufficient transport infrastructure. 

By ONCOR International 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices Per m 2 pa € US$ € US$ 

Warsaw 297.6 312.0 237.5 300.0 -3.8 10.00 9.50 -0,50 

Retail 

Per m 2 pa 

Warsaw 915.8 960.0 855.1 1,080.0 12.5 11.00 9.25 -1.75 

Industrial 

Per m 2 pa 

Warsaw 57.2 60.0 55.1 69.6 16.0 14.00 10.50 -3.50 


2002 2003 %Chge 

% % 

Offices 858.6 900.0 712.6 900.0 0.0 Cost of Finance 6.7 5.3 



Occupation 

Leases: The most common lease for new office buildings is 3-5 years 

(refurbished project) or 5-7 years (new construction) with a 3-6 months 

termination period. All rents are indexed to zloty equivalents of the German DM 

and US$ and more and more often in Euro. In new office centres, rents are 

frequently subject to an annual indexation rates range typically between 3% 

and 5%. VAT of 22% is payable on rental and sales transactions between 

companies and more often in Euro after indexed to zloty equivalents of the 

German DM and the US$. 

Additional Occupation Costs: Average operating costs for class "A" premises 

are US$ 5-7 m 2 /month. Rents usually include property taxes. 

Acquisition Costs: Notary fees are of 1.5-3%; registration duty of 5% and legal 

fees of 2-5% (although optional, legal assistance is highly advisable). Agents' 

fees range between 2-3% of the sale price. 

Oncor International 


Tel. +39 0331 45 39 81 

Fax +39 0331 59 06 62 

E-mail: nalbeoncor@tin.it 

Web: www.oncorintl.com 

Contact: Nicola Albé 


Portugal 


The majority of the Social Democrat government's policies 

have focussed on maintaining the budget deficit at below 

3% of gross domestic product. This has been achieved 

through higher taxes (VAT has been increased to 19%) as well as a 

spending freeze. Coupled with the general slowdown in the world 

economy, these measures have had a strong negative effect on both 

business and consumer confidence, and have forced the economy into a 

slight recession. 

The office and retail and industrial markets have all seen a slump in 

demand from occupiers, and rental values fell in 2003, despite the fact that 

supply in general is relatively low. We expect rental values in most sectors 

to hold steady in 2004 with a return to positive growth in 2005. 

Rent Index 

160 

140 

120 

100 

Lisbon 

Conversely, the investment market continues to be strong, but investors 

are hindered by the lack of suitable products. However, it has been seen 

that international funds have continued to invest strongly in the retail and 

Lisbon office markets when appropriate opportunities have become 

available. We expect prime yields to hold steady despite the poor 

economic outlook as demand significantly exceeds supply. 

80 

60 

40 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

By Jerry Harris, Abacus Property 




2002 2003 %Chge 2002 2003 Act. Chge 

Offices 


Lisbon (Av. da Liberdade) 252.0 228.0 -9,5 7.00 7.00 0.00 

(Amoreiras) 216.0 204.0 -5.6 7.00 7.25 0.25 

Oporto 186.0 186.0 0.0 7.75 7.75 0.00 

Retail 


Lisbon (Chiado) 780.0 780.0 0.0 7.50 7.75 0.25 

(Amoreiras) 720.0 720.0 0.0 7.50 7.75 0.25 

Oporto 600.0 600.0 0.0 7.50 7.75 0.25 

Industrial 


Lisbon 84.0 78.0 -7.1 8.00 8.00 0.00 

Oporto 66.0 60.0 -9.1 8.00 8.25 0.25 


2002 2003 %Chge 

% % 

Offices 798.0 798.0 0.0 Cost of Finance 2.9 2.2 


Industrial 374.1 374.1 0.0 GDP 0.9 -0.4 

Occupation 

Leases: Until September 1995, the tenant in occupation had effectively full 

security of tenure, and could remain in occupation indefinitely subject only 

to annual inflation-linked rent reviews. From September 1995, a new law 

came into effect whereby the parties can now choose an alternative type 

of lease (minimum term 5 years) under which the landlord has the 

unconditional right to repossession of the premises at the end of the term. 

However, the tenant has the right to terminate the lease unilaterally at any 

time with only 90 days notice. 

Additional Occupation Costs: The tenant pays a service charge for 

common costs but which excludes structural repairs and property taxes, 

which are a cost for the landlord. 

Acquisition Costs: Acquisition costs consist of a transfer tax of 6.5%, 

legal and notaries' fees at 1.15% and agents' fees at 3%, plus VAT at 19% 

on the fees. 


Edificio Atrium Saldanha 

Praça Duque de Saldanha n 1/8 o C 

1050-094 Lisboa, Portugal 

Tel: +351 21 317 05 77 

Fax: +351 21 353 05 54 

E-mail: jharris@abacus-lda.pt 

Web: www.abacus-lda.pt 

Contact: Jerry Harris 

Oncor International thanks Abacus Property for providing information about its market. 


Russia 


The Russian economy is undergoing a period of 

unprecedented growth, with positive economic indicators and 

inflation down in rouble terms. The retail boom that started in 

Moscow in 1999/2000 has now expanded to the regions, with an aggressive 

programme of shopping centre construction. Despite comparatively low 

wages by Western standards, up to 90% of Russian personal income is now 

disposable. High rates of private home ownership, which are free of mortgages 

give Russian consumers a lot of free cash to spend. 

Foreign property investment funds have finally entered the market, however 

with Moscow's small existing stock of Class A pre-let office buildings, they will 

need to expand their investment horizons further, as well as considering 

development projects. 

Rent Index 

300 

250 

200 


Moscow: Although the retail sector continues to see the highest growth, the 

spread of rental rates remains very wide, with Moscow's premier retail street, 

Tverskaya having rates from US$ 1,600 up to US$ 4,000 m 2 /year. Auchan, 

Metro, IKEA and Marktkauf continue to be the lead foreign retailers, however 

domestic retail and supermarket chains are expanding rapidly. It is expected 

that Moscow retail rents will level in 2 to 3 years time, followed by a softening 

of rents in 2004/2005. There is also an emerging trend to develop office space 

in suburban locations which offer lower rents and avoid the chronic traffic 

problems found in Moscow. 

Headline office rates have now returned to their 1998 levels, however there is 

still a shortfall in quality, class A office space. Rentals rates have reached a 

plateau and no further gains are expected as the rate of supply is set to 

increase significantly. Industrial and warehouse space has yet to receive 

significant investment interest despite the severe deficit of such space. 

150 

100 

50 

1997 1998 1999 2000 2001 2002 2003 



Saint Petersburg: Similar to Moscow the retail market is booming, with 

significant construction levels of new shopping centres and malls driven by 

foreign retailers and expansion out of Moscow by large Russian retail chains. 

Shortages of office space are gradually being resolved, and rental rates remain 

stable. Currently the only factor that could spike rental rates is if plans to relocate 

several federal government departments and the Central Bank were 

accelerated. 

By Michael Hogan, Astera Ltd. 


2002 2003 %Chge 2002 2003 Act. Chge 


Moscow 619.8 650.0 516.4 652.0 0.3 16.00 14.00 -2.00 

St. Petersburg 467.3 490.0 388.1 490.0 0.0 18.00 18.00 0.00 

Retail 

Per m 2 pa 

Moscow 1,525.8 1,600.0 1,330.6 1,680.0 5.0 20.00 17.00 -3.00 

St. Petersburg 1,192.0 1,250.0 1,069.2 1,350.0 8.0 21.00 20.00 -1.00 

Industrial 

Per m 2 pa 

Moscow 152.6 160.0 126.7 160.0 0.0 23.00 22.00 -1.00 

St. Petersburg 176.4 135.0 110.9 140.0 3.7 30.00 24.00 -6.00 


2002 2003 %Chge 

% % 

Offices 

1,287.4 1,125.0 950.4 1,200.0 6.7 Cost of Finance n/a n/a 



Occupation 

Leases: Leases are in Russian, with parallel English translations. 

Arbitration can be both in Russia and aboard. Leases of more than one 

year must be registered with municipal authorities. 

Additional Occupation Costs: Rents are inclusive of VAT of 20%, though 

some company structures are VAT exempt. Service charges rate are from 

US$ 30-50 m 2 / year. 

Acquisition Costs: Notary fees are generally 4% of assessed value, 

however the assessed value is usually substantially less than market value. 

Astera Ltd. 

7/28 B. Gnezdnikovskiy Per, 

103009 Moscow, Russia 

Tel: +7 095 777 17 97 

Fax: +7 095 777 17 98 

Email: moscow@asteragroup.com 

Web: www.asteragroup.com 

Contact: Michael Hogan 

14 Ulitsa Ryleeva, 

191123 Saint Petersburg, Russia 

Tel: +7 812 103 00 03 

Fax: +7 812 103 00 04 

Email: spb@asteragroup.com 

Web: www.asteragroup.com 


Spain 


The Spanish property market has gained momentum during 

the third quarter of 2003. Confidence from both investors 

and businesses seems to be picking up, due to the good 

shape of domestic demand, which until now has presented quite 

promising levels for both consumption and investment. 

In terms of growth, Spain continues to outperform the major European 

countries, with a GDP growth rate around 2%, in contrast with 0.8% for 

the Eurozone. 

Office market dynamics are favorable for tenants with increasing supply 

and decreasing rents. 

Office supply is expected to reach its peak by the second half of 2004, 

while demand will keep increasing at a slow but steady rate. 

It is still difficult to find significant quality office space available in prime 

and CBD areas, so companies are looking into opportunities in periphery 

and secondary areas. Rental price have recorded an overall decline during 

2003, and will continue their moderate fall until mid 2004. 

Foreign and local investors are still very active, although the market 

presents decreasing yields and lack of interesting investment opportunities. 

Some investors are acquiring medium quality office building, to redevelop 

them into residential property, as it is happening in Paseo de Gracia 

(Barcelona). This investment alternative is providing investors higher rates 

of return than average market yields. 

By Javier Bernades, Ferran 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices 


Madrid (CBD) 380.0 325.0 -14.5 6.00 5.75 -0.25 

(M-30) 257.0 225.0 -12.5 6.75 6.50 -0.25 

(M-40) 250.0 220.0 -12.0 7.50 6.75 -0.75 

Barcelona (Prime) 281.2 267.0 -5.0 6.25 6.09 -0.16 

(CBD) 230.7 209.0 -9.4 6.50 6.25 -0.25 

(Secondary) 144.2 144.0 -0.1 7.25 7.00 -0.25 

Valencia 108.0 109.0 0.9 6.75 6.50 -0.25 

Retail 


Madrid (Serrano) 1,550.0 1,764.0 13.8 6.50 6.00 -0.50 

(Preciados) 1,658.0 1,900.0 14.6 6.00 5.75 -0.25 

Barcelona (P. de Gracia) 1,150.0 1,382.0 20.2 6.50 6.25 -0.25 

(P. Ferrisa/P. Angel) 1,440.0 1,580.0 9.7 6.50 6.00 -0.50 

Valencia 1,300.0 1,375.0 5.8 6.50 6.50 0.00 

Industrial 


Madrid 95.0 105.0 10.5 8.30 8.40 0.10 

Barcelona 72.1 79.0 9.6 9.00 8.50 -0.50 

Valencia 66.0 68.0 3.0 9.50 9.78 0.28 


2002 2003 %Chge 

% % 

Offices 950.0 1,003.0 5.6 Cost of Finance 2.9 2.2 




Spain 

Occupation 

Leases: Lease terms are commonly 5 years. With annual indexation to CPI. 

Additional Occupation Costs: Service charges are about € 2 to € 3 

m 2 /month. It is also required by law to pay 2 months rent as a deposit to 

guarantee conservation. It is refunded at the end of the contract. 

Acquisition Costs: Acquisition costs consist of 7% transfer tax (not 

recoverable) or 16% VAT that can be recovered. Agents' fees are from 3% 

to 5% plus 16% VAT. 

Rent Index 

100 

80 

Madrid 

60 

40 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 


C omparative Terms: November 1993=100 

Yields 

%12 

Madrid 

%10 

%8 

%6 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 


Ferran 

Diagonal 622, 3A 

08021 Barcelona, Spain 

Tel: +34 93 600 48 00 

Fax: +34 93 200 37 56 

E-mail: jbernades@ferran.es 

Web: www.ferran.es 

Contact: Javier Bernades 


Switzerland 


Whereas Zurich is the prime property market in 

Switzerland, Geneva is the real estate focus of the Frenchspeaking 

region of Switzerland. It is a market that is 

dominated by international organisations (United Nations, etc.) and by 

financial institutions. However the emergence in recent years of new 

companies in a variety of markets, combined with changing consumer 

trends, has resulted in increased confidence in the property market. 

The Geneva market, substantially revitalised since the recession of the 

early 1990s has experienced significant growth. There is a considerable 

contrast between the CBD and Airport area. A number of schemes close 

to the latter are currently planned or under construction. 

The demand for modern, high-tech city centre premises in general is 

stable, as is the supply, made up of a healthy collection of sub-let and 

directly-let accommodation. 

Rent Index 

100 

80 

60 

Geneva 

Vacancy rates for Geneva as a whole have increased, although only to a 

limited extent which we predict is not likely at this stage to prove to be too 

much of a problem. 

Rental levels have not increased in the past twelve months; although rents 

have fallen significantly either. Sub-let accommodation offers a cheaper 

alternative to traditional lease contracts where rent burdens can be 

reduced by tenants until the end of their current lease terms. Rents range 

from CHF 450 per m 2 per annum to nearer CHF 1,000 per m 2 per annum. 

40 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 



As the transaction rate is very low and as there are very few, if any, 

possibilities of constructing new buildings in Geneva's CBD, there is 

constant pressure on prices. Net yields for prime real estate in the city 

centre or airport area equate to 5.50 - 5.75%. 

The Geneva market, despite a certain level of uncertainty, can count on a 

strong competitive advantage and a privileged position in the financial 

market. It remains as a highly sought after business location, and prime 

CBD locations will continue to be the subject of demand by the services 

sector. 

By Matthew Leguen de Lacroix, PI Performance Immobilière 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices Per m 2 pa € CHF € CHF 

Geneva 523.3 760.0 449.3 700.0 -7.9 5.60 5.50 -0.10 

Retail 

Per m 2 pa 

Geneva 1,927.8 2,800.0 1,797.3 2,800.0 0.0 5.50 5.50 0.00 

Industrial 

Per m 2 pa 

Geneva 89.5 130.0 77.0 120.0 -7.7 9.50 9.50 0.00 

NB: (1) Yields are net after allowance for owner's normal operating and purchasing costs. (2) It is very difficult to establish a yield for shops in Geneva as there are practically no shops under 

individual ownership; they are included in buildings where the yield is composed in office, residential and commercial rents. 


2002 2003 %Chge 

% % 

Offices 2,272.1 3,300.0 2,005.9 3,125.0 -5.3 Cost of Finance 0.6 0.3 

Shop unit 1,927.8 2,800.0 1,701.0 2,650.0 -5.4 Inflation 0.7 0.5 

Industrial 1,032.8 1,500.0 802.4 1,250.0 -16.7 GDP -0.1 0.4 

Occupation 

Leases: Leases are normally contracted for five to ten-year periods. Rents 

are indexed in accordance with the Swiss Retail Price Index. 

Additional Occupational Costs: Tenants may not be held responsible for 

repairs or any other similar charges. In principle, rents are exempt from 

VAT, although in a number of specific circumstances tax may be levied. 

VAT in Switzerland is currently 7.6%. Service charges may be levied in 

addition to rent. No rates or similar property taxes are levied on rented 

accommodation. 

Acquisition Costs: Transfer tax and legal fees are on a scale, starting from 

around 4%. In principle, the purchaser is responsible for such costs. In 

general, the vendor is responsible for agents' fees which are levied at 3% 

of the purchase price. 

PI Performance Immobilière 

33, Rue des Bains 

1205 Geneva, Switzerland 

Tel: +41 22 322 80 60 

Fax: +41 22 322 80 61 

E-mail: perform@perform.ch 

Web: www.perform.ch 

Contact: Matthew Leguen de Lacroix 


Switzerland 


The Swiss property market is still suffering from the 

downturn in the global economy. Zurich has been hit hard 

by this slow down and by the problems of the banks and 

the insurance companies. There are still no signs of a recovery of the rental 

market. 

In the city of Zurich there is a vacancy rate of approximately 6%, 

representing some 550,000 m 2 . Even in the CBD there is a similar vacancy 

rate and the trend is still rising. Rents fell up to 15% in 2003, but we now 

expect rents to remain at the current level in 2004. 

The demand for office space is concentrated mainly on smaller areas with 

almost no demand for larger units. There is still a lot of accommodation on 

the sub-let market, which puts a lot of pressure on rents generally. 

There are a number of potential development sites in the north, south and 

west of Zurich, so the market is likely to remain liquid for many years with 

price increases remaining marginal. 

The investment market is also slowing down as there is a lack of good 

investment opportunities and investors act cautiously. The risks in the 

rental market are rising and investors are afraid of upcoming vacancies in 

secondary locations. 

By Peter Eichenberger, Kuoni Mueller & Partner 


2002 2003 %Chge 2002 2003 Act. Chge 

Offices Per m 2 pa € CHF € CHF 

Zurich 585.2 850.0 481.4 750.0 -11.8 5.00 5.00 0.00 

Retail 

Per m 2 pa 

Zurich 3,270.4 4,750.0 2,888.5 4,500.0 -5.3 5.00 5.00 0.00 

Industrial 

Per m 2 pa 

Zurich 68.9 100.0 57.8 90.0 -10.0 10.00 10.00 0.00 

NB: (1) Yields are net after allowance for owner's normal operating and purchasing costs. (2) It is very difficult to establish a yield for shops in Geneva as there are practically no shops under 

individual ownership; they are included in buildings where the yield is composed in office, residential and commercial rents. 


2002 2003 %Chge 

% % 



Industrial 1,032.8 1,500.0 962.8 1,500.0 0.0 GDP -0.1 0.4 

Occupation 

Leases: Leases are normally contracted for five to ten-year periods. Rents 

are indexed in accordance with the Swiss Retail Price Index. 

Additional Occupation Costs: Tenants my not be held responsible for 

repairs or any other similar charges. In principle, rents are exempt from 

VAT. Service charge is levied in addition to rents. 

Acquisition Costs: Transfer tax and legal fees are on a scale, starting from 

around 1.5%. In principle, these costs are shared between the seller and 

the purchaser equally. In general the vendor is responsible for agents' fees 

which are levied at 3% of the purchase price. 


21, Schweizergasse 

8001 Zurich, Switzerland 

Tel: +41 1 212 07 79 

Fax: +41 1 212 07 18 

E-mail: info@kmp.ch 

Web: www.kmp.ch 

Contact: Peter Eichenberger 


Turkey 


Developments in the Turkish economy have remained 

positive in 2003 and economic performance has 

demonstrated the Turkish economy's ability to recover 

quickly and the responsiveness of the economy to sound policies. The 

growth projections of 5% for both 2002 and 2003 have been maintained. 

Monetary policy is being conducted skillfully, bringing the inflation targets 

of 20% for 2003 and 12% for 2004 within reach. 

2003 started as a year of continued recovery. Rental levels are now falling 

at slower levels, and some are beginning to stabilize. Vacancies have 

tended to decrease. In 2003, the market has been in a position of 

oversupply, with the only exceptions being hotel, retail and leisure 

properties. 

All Turkish properties are still at a lifetime low in terms of USD. Yields have 

stabilized and indicators suggest that short-term investors should not 

delay in starting to buy, especially high yielding properties. 

Rent Index 

160 

140 

120 

100 

80 

Istanbul 

Istanbul still remains the focus of overseas and local investments. 

However, the other Turkish cities have also started attracting the attention 

of both international and local investors, especially in the retail sector. 

By Murat Ergin, Kuzey Bati 

60 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 




2002 2003 %Chge 2002 2003 Act. Chge 


Istanbul 125.9 132.0 99.8 126.0 -4.5 12.00 12.30 0.30 

Retail 

Per m 2 pa 

Istanbul 486.3 510.0 427.6 540.0 5.9 18.00 18.50 0.50 

Industrial 

Per m 2 pa 

Istanbul 38.1 40.0 31.4 39.6 -1.0 11.50 11.50 0.00 


2002 2003 %Chge 

% % 

Offices 419.6 440.0 340.5 430.0 -2.3 Cost of Finance 34.2 25.6 

Shop unit 381.4 400.0 308.8 390.0 -2.5 Inflation 45.0 18.9 

Industrial 176.4 185.0 142.5 180.0 -2.7 GDP -7.3 3.9 

Occupation 

Leases: Leases are normally for 3-5 years. Rents are usually increased 

annually indexed to a predetermined increase which is usually 0-2%. 

Additional Occupation Costs: Tenants are responsible for withholding tax 

(28.2%) and for both structural and internal repairs. Service charges are 

between 8-12% of prime rents. VAT (currently 18%) will be applicable on 

company to company or company to person leases instead of withholding 

tax. 

Acquisition Costs: The acquisition of Turkish property is subject to a 

currently 1.5% transfer tax. The same charge will be applicable when the 

property is sold. VAT (currently 18%) will also be applicable on company to 

company or company to person sales. 

Kuzey Bati 

Nazmi Akbaci 

Ticaret Merkezi 192 

80670 Maslak, Istanbul 

Tel: + 90 212 286 1845 

Fax: + 90 212 285 0669 

E-Mail: info@kuzeybati.com.tr 

Web: www.kuzeybati.com.tr 

Contact: Murat Ergin 

Oncor International thanks Kuzey Bati for providing information about its market. 




Today there is considerably more reason for optimism in the 

UK real estate sector than there was at the same time last 

year. While demand from occupiers still remains fragile and 

patchy, there have been definite signs that the rental slide which hit key 

markets has now levelled out. 

For example, in London's West End office market, some market watchers 

predicted that the autumn would bring a spate of cuts in asking rents as 

landlords competed for occupiers. This never materialised and there has 

been enough activity to suggest that there may be a return to rental growth 

on the best space in 2004. 

By contrast the City of London office market still remains oversupplied with 

double digit vacancy rates. In percentage terms, rents in the City have 

dropped twice as far as the West End during the period 2002 to 2003. 

Rent Index 

250 

200 

150 

100 

London 

More encouragingly, in the Thames Valley market which runs west from 

London and is dominated by the IT/computer sector, there has been a 

notable rise in occupier enquiries. These markets are key benchmarks for 

UK real estate and their stabilising conditions are breathing more 

confidence into the sector as a whole. 

In stark contrast, the investment sector continues to power forward as 

investors remain unenthused about equities and try to lock into the 

attractive performance of well-let property investments. Even November's 

quarter per cent rise in the base interest rate seems to have done little to 

blunt their appetite. 

50 

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 



Banks are still ready to loan against property and there are still too many 

buyers chasing limited quality supply for there to be any softening in yields. 

Looking ahead to 2004, the investment market still has strength to go 

forward. In the occupational market, it now seems that, with development 

largely halted and corporates having shed all their surplus space, the 

markets can look forward to a more stable basis from which to recover. 

By James Crisp, Nelson Bakewell 

Yields 

Big Three 

London 


%10 

140 

%9 

120 

%8 

%7 

100 

%6 

80 

%5 

%4 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

60 

1993 

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 








2002 2003 %Chge 2002 2003 Act. Chge 

Offices Per m 2 pa € £ € £ 

London (City) 868.6 565.0 688.6 485.3 -14.1 6.50 6.25 -0.25 

(West End) 1,076.1 700.0 908.1 640.0 -8.6 6.25 5.90 -0.35 

Birmingham 347.4 226.0 320.7 226.0 0.0 6.75 6.50 -0.25 

Bristol 355.1 231.0 327.8 231.0 0.0 7.50 6.75 -0.75 

Leeds 330.5 215.0 283.8 200.0 -7.0 7.25 6.75 -0.50 

Manchester 413.5 269.0 350.5 247.0 -8.2 6.75 6.50 -0.25 

Edinburgh 479.6 312.0 427.6 301.4 -3.4 7.00 6.50 -0.50 

Glasgow 381.3 248.0 336.0 236.8 -4.5 7.25 6.50 -0.75 

Retail 

Per m 2 pa 

London (Oxford St.) 6,994.7 4,550.0 6,445.7 4,550.0 0.0 6.00 5.25 -0.75 

(Knightsbridge) 7,917.1 5,150.0 7,307.0 5,150.0 0.0 5.75 5.50 -0.25 

(New Bond St.) 6,917.9 4,500.0 6,384.8 4,500.0 0.0 5.00 5.25 0.25 

(Regent St.) 5,380.6 3,500.0 4,965.9 3,500.0 0.0 6.00 5.75 -0.25 

Birmingham 4,765.6 3,100.0 4,540.3 3,200.0 3.2 6.00 5.25 -0.75 

Bristol 2,894.7 1,883.0 2,553.9 1,800.0 -4.4 6.00 5.50 -0.50 

Leeds 4,227.6 2,750.0 3,901.8 2,750.0 0.0 5.50 5.25 -0.25 

Manchester 4,611.9 3,000.0 4,256.5 3,000.0 0.0 5.75 5.25 -0.50 

Edinburgh 3,474.3 2,260.0 3,054.5 2,152.8 -4.7 6.00 5.25 -0.75 

Glasgow 3,843.3 2,500.0 3,547.1 2,500.0 0.0 5.75 5.25 -0.50 

Industrial 

Per m 2 pa 

London 198.3 129.0 183.0 129.0 0.0 6.50 6.50 0.00 

Birmingham 90.7 59.0 88.0 62.0 5.1 7.00 7.00 0.00 

Bristol 110.7 72.0 102.2 72.0 0.0 7.50 7.25 -0.25 

Leeds 78.4 51.0 75.2 53.0 3.9 7.25 7.00 -0.25 

Manchester 86.1 56.0 83.7 59.0 5.4 7.00 7.00 0.00 

Edinburgh 98.4 64.0 90.8 64.0 0.0 7.25 7.00 -0.25 

Glasgow 92.2 60.0 76.3 53.8 -10.3 7.25 7.00 -0.25 


2002 2003 %Chge 

% % 




Occupation 

Leases: The most common lease is ten or fifteen years. Tenant's break 

options at years five and ten are still available on some space but much 

less common. Rents are usually reviewed every five years, generally on an 

"upwards only" basis to open market value. 

Additional Occupation Costs: Tenants are normally responsible for all 

repairs, insurance and local taxes (rates). In multi-let buildings, service 

charges can be between 10% and 20% of prime rents. Rates are 

equivalent to 35-40% of rental value. VAT at 17.5% may be applied to the 

rent and service charge. 

Acquisition Costs: Acquisition costs consist of agents' and lawyers' fees 

of 1.5%, plus VAT and stamp duty. Stamp duty varies on lot size: 1% under 

£ 250,000; 3% between £ 250,000 to £ 500,000 and 4% over £ 500,000. 

Total costs are typically 5.7%. 


25 Sackville Street 

London W1S 3HQ, United Kingdom 

Tel: +44 207 544 2000 

Fax: +44 207 544 2222 

Email: jcrisp@nelson-bakewell.com 

Web: www.nelson-bakewell.com 

Contact: James Crisp 


Exclusion Table & Definitions 

Country 

Items included from floorspace as defined for rental purposes 

Shops/Offices 

Structural Walls Stairs Lifts Toilets Entrance Lobby 

Industrial 

Structural Walls 

Belgium X X X 

Czech Republic X X X X X 

France X X X X X X 

Germany X X X 

Hungary X X X X 

Ireland/N. Ireland X X X X X 

Italy X X X X X X 

Netherlands X X X X X 

Poland X X X X X X 

Portugal X X X X 

Russia X X X 

Spain X X X X X 

Switzerland Geneva X X X X X X 

Switzerland Zurich X X X X X X 

United Kingdom X X X X X X 

X = excluded * Items are excluded only if rented to multi-tenants 

Stairs 

Definitions 

Office Rents 

Rents are based on first class suites of 500 m 2 in the prime location 

of principal cities and on modern schemes in excess of 2,000 m 2 

with a good specification, in the best location, in provincial cities. 

Shop Rents 

All retail rents are in m 2 per annum, for shops in the busiest retail 

position in the city. 

Industrial Rents 

Rents are based on a single storey 1,500 m 2 industrial/warehouse 

unit of steel portal frame and brick construction with an eaves height 

of at least 6 m. 

N.B. All rents are as at December 2003 

Additional Occupational Costs 

Rents are exclusive of service charges and local taxes. 

Building Costs for Offices 

The cost is based on a 3,000 m 2 self-contained, air-conditioned 

building in the major city in each country. The accommodation is 

built to a good finish, including false ceilings, carpets, lighting and 

power points, but excluding partitioning. The cost includes 

professional fees. 

Building Costs for Shops 

The cost is based on a standard shop unit of 140 m 2 built as part of 

a parade, with either office or residential accommodation above, but 

not in a major covered shopping centre. It is constructed to a shell 

finish and excludes the shop front, except in Switzerland, with 

certain finishes provided. The cost includes professional fees. 

Building Costs for Industrials 

The cost is based on a single storey unit of 3,000 m 2 of steel portal 

frame and brick construction with an eaves height of at least 6 m. It 

is finished to a basic shell, with services and heating to the office 

space but not to the industrial/warehouse space. The cost includes 

professional fees. 

Prime Yields 

The figures given are the initial returns receivable by the investor for 

prime property, fully let to a first class covenant at an open market 

rent. 


Euro Conversion Rates 

Denmark 

2002 Conversion Rate: 0.135 


Northen Ireland 



Norway 



Poland 



Russia 



Switzerland 



Turkey 







Notes 


Members in Europe and Markets featured 

Belgium 


Denmark 

France 

Germany 

Italy 

Netherlands 

Norway 

Poland 

Russia 

Spain 

Switzerland, Geneva 

Switzerland, Zurich 


Hugo Ceusters 



Soprec Immobilier d’Entreprises 




DnB Næringsmegling 

ONCOR 

Astera Ltd. 

Ferran 

PI Performance 



thanks the following who have also contributed 

Hungary 

Varpex Ltd. 


Osborne King 

Portugal 


Turkey 

Kuzey Bati 


Nicola Albé European Managing Director Via Torino, 12 20025 Legnano (MI) ITALY 

Telephone: +39 0331 453981 Fax: +39 0331 590662 Mobile: +39 335 7104944 E-mail: nalbeoncor@tin.it 

Every care has been exercised in the preparation of this booklet, but no responsibility can be accepted for any errors or omissions. 

© ONCOR INTERNATIONAL, March 2004 Produced by ONCOR INTERNATIONAL Printed in Italy

oncor 2004 - Sadolin & AlbÃ¦k

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