IMMOEAST Annual Report 2006/07

Outlook and strategic goals
Property valuation, Strategic goals
In spite of the high growth rates recorded in recent years, the property markets in Central, Eastern
and South-eastern Europe have only exhausted a fraction of their long-term potential. A comparison
with the established markets of the west gives an impressive picture of the potential that is offered
by this region over the mid- to long-term.
Although the size of the populations in Budapest and Vienna is comparable, Budapest has only
around one-fourth the office space currently available in Vienna. In Berlin there is more office space
than in the whole of Poland, and the Paris or London office market is larger than the entire office
market in Central and Eastern Europe. The difference is even more apparent when the development
of the property markets in South-eastern Europe is analysed: while Romania has a population of
more than 20 million, the office market covers approx. 850,000 sqm. A similar developmental pattern
can also be identified in other parts of the market such as the logistics or residential sectors.
The rapid economic recovery that has taken hold throughout the region, in the EU countries as well
as Ukraine, Russia and the successor states of the former Yugoslavia, will push economic performance
up to western levels over the coming 15 to 20 years. The property market is also forecasted to
show a corresponding improvement.
The excellent growth perspectives for the entire market form the backdrop for the long-term strategic
goals of IMMOEAST. The company has established a firm position as the largest property
investor in the region and, as the market leader, can profit best from its growth. For this reason,
IMMOEAST has placed the primary focus of activities on strengthening its leading position on the
markets in which it is present. Expansion into new markets in Eastern and South-eastern Europe as
well as other successor states of the former Soviet Union is generally planned, but IMMOEAST sees
substantially greater opportunities for growth in its current markets.
Diversification and higher share of development projects
Current plans call for IMMOEAST to maintain the present structure of the property portfolio over the
long-term. The broad sector diversification with a strong focus on retail, office, logistics and residential
properties will remain a key element of the IMMOEAST strategy. That will allow the company
to utilise the growth opportunities provided by all segments of the market and safeguard the stability
of earnings and the further increase in the value of the portfolio over the long-term.
The increase in investments for development projects – which exceeds the acquisition of investment
properties for the first time in 2006/07 – will also continue over the long-term. As a result of
the declining yields on completed objects, projects in the development area offer good opportunities
for significantly higher initial returns and a sound potential for an increase in value.
The long-term goal of IMMOEAST is to maintain its number one position in Central, Eastern and
South-eastern Europe as well as Ukraine and Russia. Today IMMOEAST is the top player in a region
where the volume of the property markets plays only a supporting role on the European stage. In
15 to 20 years these markets should become the leading actors in a region that will represent more
than one-third of the European property market based on its share of the European population.
Report by the Executive Board 29
Highlights 2006/07
Business Model and Strategy
Portfolio Structure
Corporate Governance and Outlook
Property Portfolio
Development of Business
Consolidated Financial Statements
Service and Glossary
Property markets in in
Central, Eastern and Southeastern
Europe still have
great great potential
Primary focus placed on
growth in current markets
Increased Increased share share of developmentment
projects creates new new
opportunities opportunities for earnings