Fund / Region

The geographical region is normally abbreviated as CEE, Central and Eastern Europe. According to the World Factbook the following countries fall within Central Europe: Germany, Poland, Czech Republic, Austria, Slovakia, Slovenia and Hungary. The Baltic States fall within Eastern Europe. Countries to the south of Hungary such as Romania and most elements of the former Yugoslavia are considered part of South-Eastern Europe.

Following the fall of communism in the region at the end of the 1980´s, Central and Eastern Europe proceeded to grow at an average annual rate 2% above western Europe for the following 15 years. in 2008 this growth came to an abrupt halt with the worldwide economic crisis. Countries such as Hungary, Romania and Bulgaria which had been most reliant on foregn capital flows for growth were particularly badly affected. Poland in contrast avoided an actual recession, whilst both the Czech Republic and Slovakia weathered the crisis reasonably well.

Recent years have seen a resumption of growth to levels well above the European average. The region´s competitive advantages include its central location within the European continent, a trading market of 200 million consumers, good availability of skilled labour, relatively low costs and a positive investment climate. 


Poland, with 38.5 million inhabitants the biggest country in the region, is also one of its most dynamic and successful economies. Following a slowdown in GDP growth in 2012 and 2013 the economy picked up strongly in 2014 and has powered ahead since, growing by 3.6% in 2015, 2.9% in 2016 and 3.2% (forecast) in 2017.

The current unemployment rate (mid 2017) is 7.1%. Average monthly salaries are circa EUR 1,012  and the current inflation rate is 1.8%.

The real estate market in Poland

By mid 2016 the provision of modern retail space in Poland amounted to 13.01 million m², with 115,800 m² added in the first six months of that year. In the major cities such as Warsaw, Cracow, Poznan, Wroclaw and Gdansk the vacancy rate is in the range 1.5% to 4%, being particularly low in Warsaw due to low levels of development completions in recent years.

International retail chains are continuing selective expansion programmes in the country, with LPP Group and CCC being particularly active.

Rental levels are stable in the regions and rising modestly in the major centres.

Czech Republic

Since 2013 the Czech Republic has shrugged off the effects of the economic crisis and consolidated its standing as one of the most stable countries in the region. In 2015 GDP growth reached 4,3%, one of the the highest in the world. For 2016 the European Commision is forecasting GDP growth of 2.2%, rising to 2.6% for 2017. The economy is supported by an active monetary policy, low energy pricing and high private consumption, the latter forecast to grow further due to improving labour market ratios.

The Czech Republic has a population of 10.5 million, a current unemployment rate of 3% ( the lowest in Europe) and a prevailing inflation rate of 0.8%

The Real Estate Market in the Czech Republic

Prague and Brno are the two most important cities in real estate terms, favoured by both domestic and international investors. The market in the regions is also very active but dominated by local participants. The total transaction volume in the Czech Republic for the first half of 2016 was € 985 million, a 25% decrease on the equivalent period in 2015. Retail is the dominant sector, accounting for 43% of total investment volume.


The Slovak Republic consists of 8 semi-autonomous regions. The quality of transport links and infrastructure, rates of economic growth and employment and average salary levels vary across the regions. The western part of the country (the Bratislava and Trnava regions) is more developed than eastern regions such as Košice and Prešov. Slovakia is a major production centre for the European automobile industry, with Volkswagen in Bratislava, Peugeot/Citroen in Trnava and KIA Motors in Žilina producing more than 1 million vehicles per year. From 2018 Jaguar/Land Rover plan to produce a further 300,000 cars per year from a new facility in Nitra.

The recovery of the Slovak economy from the worldwide economic crisis has been one of the strongest and most rapid in Europe, with GDP growth in 2014 hitting 2.4% in comparison to the European average of 0.9%. Unemployment remains relatively high ( 9,1% end October 2016) although this is now falling quickly. Inflation is negative, at -0.31% (October 2016).

The real estate market in Slovakia

The real estate market in Slovakia varies from region to region. In and around Bratislava there is extensive provision of A-class office space,but very limited supply in the regions ( with the specific exception of some recent development in Kosice and Zilina). These markets are characterised by B and C-class office buildings with low average rents and a restricted pipeline of new product.

The dividend policy for Arcona Property Fund is to pay at least 35% of the annual direct result as a dividend. The target is, within a three to five year time frame from end 2016, to increase annual dividend payments to a level of 8% of the prevailing share price.

Arcona Property Fund counts the following substantial companies amongst its tenants: