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17.03.2006

CA IB creates Emerging Europe Real Estate Index (CA IB REX)

  • Certificates have been issued
  • Record investments in the Emerging European real estate sector

CA IB created a new index that reflects the enormous interest in the real estate sector for Emerging Europe investors from around the world: the CA IB Emerging Europe Real Estate Index (CA IB REX).  Subsequently, CA IB issued an index certificate that offers a new and lucrative possibility to participate in this boom market. "Emerging Europe is the fastest growing real estate market within Europe. We have seen record capital inflows of approx. EUR 5bn into the region in 2005 – Turkey excepted - with approx. EUR 2bn being raised through IPOs. For 2006 we expect capital inflows to increase even further reaching a possible EUR 10bn in total transaction volume including capital markets' activities", said Fritz Schweiger, CEO of CA IB International Markets, the equity house of Bank Austria Creditanstalt (BA-CA).

Real estate expertise for Emerging Europe
CA IB has developed itself into a real estate expert on the Emerging European equity markets. Currently, CA IB is preparing for IPOs and capital increases within the sector at a total amount of several billion euros, with listings in Vienna, on AIM, in Warsaw and Istanbul. In Austria CA IB is busy placing the capital increase of Conwert Immobilien Invest AG in the function as a lead manager.

Moreover, CA IB's real estate experts will welcome a record number of international investors at the "CA IB Real Estate Conference" in London at the beginning of April. CA IB is proud to have the largest Emerging Europe real estate team within the City of London. 

Certificate with 29 components
The certificate, which is listed on the Vienna Stock Exchange, is based on 29 real estate stocks from the entire region. The biggest country constituent of the index is currently represented by Austria (35%). However, Austria's country share is diminishing due to investors' increasing risk appetite reflected by capital being shifted to more market knowledgeable CEE 3 players and higher yielding real estate markets such as Ukraine.

Although lower risk profile real estate investors still hold the lion share in the index' activities breakdown at 58%, real estate hybrids' share (24%) is increasing. Real estate hybrids, which combine real estate development with real estate investment activities, build both on the yield convergence and on the construction boom investment case and are more likely to outperform in the short term given their operational mix.

CA IB's REX certificates are targeted to institutional investors at the moment. A corresponding product for private investors is in the pipeline. However, Schweiger neither anticipates an overheating of the market or a bubble on the horizon.

Turkey and Russia at the top
From a performance perspective, Turkey followed by Russia have been clear outperformers in 2005, rallying more than 100% since the inception of the index at the beginning of 2005. "Record capital flow into the EME Real Estate sector are likely to continue in 2006, exercising further pressure on yield convergence", explained Patrick Berger, equity research analyst at CA IB.
With the speed of convergence decelerating significantly in the CEE-3 region over the next two years, investment flows will look to relocate the yield convergence success story in less developed markets such as Turkey, Russia and Ukraine.

With supply of suitable quality investments still lagging significantly EU 15 levels, a regional development boom over the next years represents a longer term investment case for the sector. The biggest risk to the current bullish investment case is represented by sustainable higher bond yields, which could derail a sector that has rallyed massively globally in the last decade.

Enquiries: Bank Austria Creditanstalt International Press Relations
Veronika Fischer-Rief, Tel. +43 (0)5 05 05-82833
E-Mail: veronika.fischer-rief@ba-ca.com