The markets of the CEE have a high catch-up potential for GDP per capita, the average GDP per capita in CEE countries is less than half that of the EU 15, and the catch-up is clearly underway.

Average payroll costs are often only one third of the EU 15 countries.

Corporate income taxes are significantly lower than France or Germany in most countries of the CEE with apparently healthy competition to see whose tax system brings the most benefits to a country.

There are growing transfers of capital from West to East, from EUR 3bn in 2003, EUR 7bn in 2004 rising to an estimated EUR 20bn for 2007. The EU's total structural budget annually is about EUR 120bn, and funds for Eastern Europe are set to increase strongly after 2007.

Average loans per capita in CEE countries are far below that of Western Europe - this will allow for substantial changes to be possible as wages rise; more people want to own their own properties; interest rates remain low enough to tempt people into the property market for the first time; all leading to a big increase in demand for real estate.

Prime office yields are in the 7-10 % range for CEE capitals compared with 4-5 % achieved in London, Frankfurt, Madrid and Paris.

Office area per inhabitant in Prague, Warsaw and Budapest is about 20-30 % of that of the EU15, with Budapest, Sofia, Zagreb and Belgrade in the range of 1-6 % of that of the EU15 countries.

Although real estate markets in CEEREF target countries were hit hard by a financial crisis, we believe that the long term story of economic catching up and EU and EuroArea accession is intact. In this light, the current crisis may present excellent investment opportunities.