Emerging Europe: Capital values fall in most of CEE

Property yield rises stepped up in Q3, causing all-property capital values to fall on a quarterly basis in the CEE markets except for Bucharest. This was despite solid office and industrial rental growth. Looking ahead, stretched valuations point to further rises in yields. And the outlook for rental growth is poorer as the economic backdrop is expected to deteriorate significantly. As such, we think sharper falls in capital values are to come.

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