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:
Does anybody really know where Amazon is going? The Czech industrial sector hasn’t been getting much sleep lately, what with everyone’s falling over themselves to woo the world’s largest on-line retailer. The site will have to be ready to go almost immediately, and with 30 ha rumored to be needed, there can’t be that much choice.
You’d think that choice would be made simpler depending on exactly which market is supposed to be served by the huge shed (rumored at 100,000 sqm). Will it service CEE and Austria? Then Brno would make sense (and might explain some recruitment sounding letters going out to students there). Will it serve Germany? Then surely, it will have to be placed west of Prague. But it will need quite a lot of people as well, so it’s unlikely to be a remote site.
If you have a hint, or a clue, drop us a line. Anonymous tips are always welcome in the tip box.
The New York Times has picked up on a story that’s been doing the rounds in Prague for some time now: the Czech banks are doing just fine. As in, they’re profitable – earning dividends for their western owners – and their level of non-performing loans has dropped from 6.4% to less than 6%. It attributes their stability to their having stuck to the rather more boringly traditional activities of banks, like lending money to people and companies, rather than seeking super-profits in the sexier areas of investment banking.
“The industry is in good shape; the sector is stable and has not needed any assistance in the recent crisis,” said Jiri Busek, an analyst with the Czech Banking Association. “It’s quite a unique position in Europe, and we are grateful for it. We are stable, healthy and profitable.”
Now, anyone who knows anything about the way things went down here knows that Czech banks have their share of issues in the property sector. Nobody came out of the boom smelling like roses. The Czech economy is currently in its longest recession and isn’t exactly galloping back to growth.
Does the name Ambrose Evans-Pritchard ring any bells? He’s the (self-acclaimed) prophet at the Daily Telegraph who back in 2009 tried to wreck all faith in this region’s banking sector by warning that western banks had billions of euro of exposure in the sewer of CEE. “Failure to save East Europe will lead to worldwide meltdown” (that’s the actual headline) made for thrilling, shiver-inspiring reading at the time. Reading the it today makes clear the dangers of quoting adrenalin-induced predictions of economists and doomsday headlines. Remember, this is 2009:
“A failure rate of 10pc would lead to the collapse of the Austrian financial sector,” reported Der Standard in Vienna. Unfortunately, that is about to happen.
The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a “monetary Stalingrad” in the East.
The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU “union bonds” should the debt markets take fright at the rocketing trajectory of Italy’s public debt (hitting 112pc of GDP next year, just revised up from 101pc – big change), or rescue Austria from its Habsburg adventurism.
So we watch and wait as the lethal brush fires move closer.
If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?
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.
At what point does Europe (meaning Angela M) decide that massive unemployment in Spain is more of a threat to the European project than a bit of stimulus? Can anyone actually imagine things not blowing up on the Iberian peninsula by 2015, when Societe Generale figures that about one in three adults will be out of a job? There’s conservative economic theory, and then there’s real life and things like common sense. Enough is sometimes enough.
Telecom pain has arrived in the Czech Republic, with news that the biggest employers, Telefonica and T-Mobile both announcing that layoffs are on the way. That’s good news for exactly nobody, including office developers and owners, given the size of the real estate needs these companies have. You have to wonder at times like this how flexible their lease contracts are.
For what it’s worth, Vodafone claims not be planning to fire anyone at the moment.
Yet another developer/property owner has dodged a bullet, after no one was killed in the latest roof collapse. This one took place in a multiplex theater in Pilsen at the Plaza shopping center. Five people were injured in the accident, with one woman requiring hospital care after, but thankfully, luckily, no one was killed. It’s hard not to think back to another shopping center in Poland last year that saw a roof cave in, and to the the stunning collapse of a roof in Bratislava, without asking just what’s going wrong?
These days it’s popular to scoff at the endless due diligence process going on, and brush off complaints about CEE developers/ construction companies / investors skimping on quality. This kind of near-disaster, though, is a stark reminder of just how much is at stake. Waiting for the police to complete their usual 8 month investigation that turns up nothing specific is an effective PR strategy, because the shock wears off and people forget. But it’s certainly not good enough.