The new realism at CEDEM 2007

There was much that was new at the eighth annual property conference CEDEM CEE 2007 was held in Prague on September 18-19 at at the the well-situated Corinthia Towers hotel. This included most notably a first-ever panel discussion on sustainable development, a panel exploring the recent credit crunch that's now spread far beyond the United States sub-prime sector, and an opening Investment Breakfast meeting featuring a well-received series of presentations from CB Richard Ellis.

Other features of the conference were more traditional. As in past years, Česká spořitelna was the General Partner of CEDEM CEE, which was once again extremely well attended. But there was a decidedly different atmosphere this year on a number of levels. If there was one theme that overrode the event as a whole, it was the idea that property investments of all kinds would take a higher level of sophistication.

This was perhaps best illustrated by Nick Tyrrell (JPMorgan Asset Management) who made a return to CEDEM, having last spoken at the event back in 2003. He recalled that rents had been far lower in the region then, with yields considerably higher. In the intervening years, rents had been relatively stable, while yields had fallen dramatically in CEE, to the extent that some cities in Western Europe had higher capital values. He was joined in this closely followed debate by Paul Kennedy (Invesco Real Estate), who claimed that yield shift was essentially over, as investors look to diversify portfolios by taking on higher quality assets. Moderator James Chapman of Cushman & Wakefield took issue with the panel's title ("Life after yield compression"), but allowed that there was an increased caution in the market these days.

Another panel, CEDEM's first-ever on sustainability issues, was entitled "Green Tide Rising." Graham Reece (ProLogis UK) argued that there was real value in green buildings, describing them as a “benefit to the industry as a whole.” Rabih El Fadel (Zero Energy First) said sustainability was the “only way forward.” He added that environmentally-friendly features didn't automatically mean more expensive buildings, and listed many different ways for buildings to both reduce energy use and save money in the long run. Vincent Marani (Marani Architects) added a few ideas of his own while praising the American environmental rating system LEED. He stressed the importance of cooperation among a building's design team but admitted the current reality doesn't yet encourage sustainability, blaming the scourge of value engineering.

And yet cost-cutting is becoming ever more prevalent, as construction prices continue to go through the roof. These were the conclusions of another extremely topical panel, CEE's Runaway Construction Costs. Moderator Glyn Evans (King Sturge Czech Republic) said project managers are increasingly dividing up tenders into pieces and looking much more closely at the work of subcontractors. Richard Hill of EC Harris in London said that open book arrangements were proving useful. Chris Gunn of Gardiner & Theobald warned that the office sector would have a tougher time dealing with rising construction costs than, say, residential, as developers are loathe to increase rents. Iain Leyden (Caledonian Project Management) agreed, adding that while with warehouse construction, discount prices are available when buying materials, larger and higher quality individualized types of schemes sometimes required specialized materials.

The rest of the program was equally rich, with discussions that focused on the hotel sector, urban regeneration, the industrial sector in the expanded EU, and the office market. More than 40 speakers in all took part in the discussions. The social aspect of CEDEM CEE played an equally important role this year, with meals, networking breaks and, above all, the popular gala evening party held this year at the spectacular Občanská plovárna complex at the edge of the Vltava river, which boasts a spectacular view of Prague 's Old Town.

Roberts Publishing Media Group would like to thank all of the partners and participants at CEDEM CEE 2007 for making possible this successful regional event.