Eastern European Property Portfolios plummeting in value!

Tuesday, 10th March 2009 09:34 - by GedW

Europe’s developing economies from Poland to Ukraine are facing their worst economic crisis since the fall of the Berlin wall 20 years ago. Capital is fleeing Europe’s East, causing a deluge of debt defaults. This will certainly affect those UK listed companies that have property portfolios in this region. Former asset valuations must now be taken with a pinch of salt. Potential takeover targets, with alleged under-valued asset valuations versus market cap, must now consider themselves less of a target - as some bets are off. Eastern European borrowers need to repay some $400 billion in debt owed to Western Banks this year. Much of that is denominated in foreign currencies, according to Swiss bank UBS. Hungary’s residential property market is in dire straits and is threatening to undermine its entire economic stability. Almost all of its mortgages are in foreign currencies, typically the Swiss Franc. Bulgaria, once seen as a ‘safe harbour’ for those wanting to invest in former Soviet stable economies now has a glut of holiday apartments lining the Black Sea. All these factors are causing a huge back-log of ‘bricks & mortar’ in the Eastern European market without any buyers, causing the balance sheets of some of the UK’s listed companies to be revalued as their Eastern European portfolios take massive write-down hits. Those UK listed outfits with activist takeover activity will now be re-evaluated, those with cash being the most sought-after as pockets of value are found.