The recent flooding in Prague was big on drama, but surprisingly light on damage. People in this part of the world seem to be allergic to admitting that the state has gotten something right, but to a large degree, the flood control measures implemented and built after the horrendous 2002 deluge seem to have done the trick.
That being said, the post-event analysis will no doubt turn out lots of problems and shortcomings. One of the issues will be that new flood barriers definitely did the business as far as fighting a 2002-style event, but it turns out that each flood is different (shocking, isn’t it?). This time, with the rain advancing quickly from the north, the local creeks accounted for much of the local flood damage that occurred.
By now, most people will have seen the rather depressing aerial pictures of Crestyl’s DOCK project, a view that made things at the ongoing project look grim indeed. These fears seem to have been overblown. Crestyl’s director Omar Koleilat is quite relaxed about sending pictures from the site, and is even inviting us for a visit. Which we’ll of course take him up on. He explains that while there was obviously water in the underground portions of the scheme, the rest of the damage was thankfully quite minimal. We’ll go see for ourselves and report back. For now, you can check out the pictures.
These two shots are from last week, the day after the flood.
And these shots are from yesterday:
It’s become pretty commonplace to say that Warsaw’s office market is in trouble, that the pipeline is just too big and that the country’s economic boom was all just an offshoot of a binge of EU-funded road-building. The truth will turn out to be far more subtle and complex.
As we’ve been told ad naseum, Poland is long in smart, ambitious young people with highly marketable skills in finance, technology and languages, it’s also just plain big. European-big. And this is part of the reason the Warsaw Stock Exchange has quietly become one of the more attractive markets in Europe. Immofinanz didn’t just double-list there for marketing purposes, after all. It wants Polish pension fund money.
Anyway, the next time someone tells you Warsaw’s office market is past its peak, send them to links like this article.
Record stock sales and a growing economy are helping Poland solidify its position as central Europe’s busiest financial center, even as euro-area neighbors struggle to shake the sovereign-debt crisis. UniCredit SpA (UCG), JPMorgan Chase & Co. (JPM) and Societe Generale SA (GLE) are establishing investment-banking hubs in Warsaw, where equity sales of 15 billion zloty ($4.6 billion) this year exceed the $490 million in the rest of central Europe.
Get it? If that doesn’t make the doomsayers think twice, give them the link to this article: SocGen’s Russian Unit Said to Cut Hundreds of Jobs in Moscow.
Is this part of the cost-cutting switch over to CEE people have been warning about, for what seems like years now? Nokia says it’s going to be closing its Vienna-based headquarters for Central Europe and moving 60 jobs to Budapest. Those willing to follow the jobs two hours down the M1 are allegedly welcome to do so, but would they really be the same jobs (i.e. at the same salaries)? Wonder who’s looking for the office space for Nokai…
It doesn’t mean the company’s workforce at its factory in Savar can breathe easier, though, as half of the plant’s workforce are being given pink slips.
It’s tough to think of many more important transactions that could take place in Central Europe than one involving the Warsaw Financial Center. And that’s exactly what was announced today, with co-owners CA Immo and Pramerica Real Estate Investors agreeing provisionally to selling the asset to Allianz and Curzon Capital Partners III, a fund managed by Tristan Capital. JLL and Colliers advised the vendors on the deal, who acquired the building originally in 2005. The two held 50% shares each in the 50,000 sqm asset, but in the new arrangement, Allianz will hold 87.5%. The sale price was announced to have been €210m.
“Our investment strategy calls for 7-10 % of the overall portfolio to be sold every year in order to take maximum advantage of positive market phases and generate profits,” says Bruno Ettenauer, Chief Executive Officer of CA Immo. “Capital released in this way is earmarked for debt reduction and the realisation of current development projects. We are looking forward to the successful sale of the Warsaw Financial Center, which has now been agreed. This transaction will have a significantly positive impact on the annual result for 2012.”
According to ZF, the Tower Center on Victoria Square in Bucharest has been snapped up by Ioannis Papalekas and Bîlteanu Dragos, two of the strongest real estate investors in the local market. The two don’t tend to be excessively forthcoming about the deals they do, so it’s not a surprise that the pricing details haven’t surfaced yet. But they’re unlikely to have paid what the developers, Industrialexport and Avrig 35, originally envisioned, as ZF claims the building has no tenants yet. With its 22 floors and a height of 106 meters, it’s described as the tallest completed office tower in town since the doors opened in 2008.
CBRE has helped a private Austrian group dispose of the Prague 13 office project Metronom. The 34,000 sqm office project has been waiting to happen for at least a decade, but somehow never got built. That’s surprising, on the face of it, considering it sits right on top of the Nove Butovice metro station and across from a shopping mall (granted, not exactly the most successful one ever).
The owners, originally connected in some fashion with Doughty Hanson (which also used to own the Nove Butovice Business Park) seem to have decided the current development environment didn’t suit them and sold it to a company (i.e. HB Reavis) better suited to the times. Originally, the project was being sold along with a 20,000 sqm residential component, but the owners were advised to split the plot into two separate investment packages to increase the final price (and probably its sell-ability). The residential portion could end up being sold soon as well, as it happens.
“I wouldn’t say it’s the best time to sell such projects,” says one market observer. “But it’s a good time to buy. A lot of companies are coming under pressure from the banks, so they have to sell. They’re not selling for the price they wanted to achieve, but the price that the market is telling them.”
This should be music to the ears of agents everywhere, but they’re hoping someone will turn up the volume a bit higher…
The credit committee of ECM Real Estate Investments has chosen to entrust the reorganization of the company to the development group Crestyl.
The reorganization of ECM REI was accepted back in March as the outcome by the courts of an insolvency process that had taken a year. Crestyl’s goal will be to minimize the impact of insolvency on ECM’s position and its properties.
Crestyl’s director Omar Koleilat said “This is a very interesting experience and I believe we’ll be able to complete the assignment successfully. We intend to work very closely with the credit committee and with the whole management of ECM.”
The option before the committee, and which was reportedly preferred by some, would have been to simply liquidate all the property of the company. The implication would seem to be that with a professional property company running the show, considered decisions on how best to proceed with ECM’s assets will be taken, meaning some properties may yet be developed in order to produce a greater level of return. Part of the deal is that ECM REI’s management structure will be changed, including the appointment of Koleilat as board member. ECM’s various companies will then be moved to Crestyl’s offices “in order to maximize the synergies of both teams.”