Boston, MA -- (ReleaseWire) -- 04/14/2014 -- We forecast that an improved economic performance in 2014 will underpin increased activity, in terms of both supply and demand, in Slovakia's commercial real estate market in 2014. Despite lower economic growth than in 2012, the Slovakian economy still increased by 0.6% in 2013. In 2014, economic growth is expected to increase by 2% year-on-year.
Across the retail, office and industrial real estate markets, BMI predicts rents to remain at 2013 levels moving into 2014. High volumes of new supply will act as a counterweight to potential rental increases fuelled by increases in demand in some sectors.
In the retail sector, Slovakia currently has roughly 1.54m2 of retail space, of which over a third is situated in the capital, Bratislava. With the exception of the opening of Slovakia's first designer outlet centre in October 2013, there was very little activity in the retail real estate market over 2013 as a whole. However, on the back of the 'one fashion outlet' centre towards the end of 2013, BMI predicts increased activity in 2014, particularly regarding a higher volume of new retail supply.
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Like the retail sector, rents in the office sector will remain stable moving into 2014. With vacancy rates of 12% in Bratislava, amounting to 1.5mn m2 of space, and several new large-scale completion expected in 2014- including the Westland Gate complex (35,000m2) - supply will significantly exceed demand in the market.
Despite record numbers of leased warehouse space in Bratislava in the first half of 2013, increased speculative developments in the industrial real estate markets should create a favourable environment for tenants by ensuring that rents remain stable. Over the course of 2013, industrial vacancy rates rose; increasing from 4.53% in Q212 to 6.30% in Q313. Nonetheless, demand for industrial space in Slovakia continues to rise. Thus, despite BMI forecasting that rents will remain at 2013 levels in 2014, BMI does see the potential for rents to increase moving into 2015. Given the relatively low rents and cost, tenants of industrial properties should gain net yields of between 8% and 11% across Slovakia.
- We have revised up our real GDP growth forecast for 2014 and 2015 to 2.2% and 2.8% respectively, fro m 2.0% and 2.6% previously. This is based on strong industrial production and retails sales readings in H 213 that point to a more broad based economic recovery taking hold.
- Our forecast for Slovakia's fiscal trajectory has been revised to reflect the government's updated mediumterm budget objectives, which include a slower pace of deficit consolidation.
- In October 2013, the 15,000m2 'One Fashion Outlet' designer outlet centre, Slovakia's first such facility, opened in Bratislava.
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