Our analysis of the recent recession confirms that the volatility of headline retail rents in Emerging Europe can be exacerbated by swings in the exchange rate. Indeed, we estimate that each 1% fall in the exchange rate pushed headline retail rental values down by 0.6% over and above the fall that can be explained by changes in demand and supply fundamentals. However, we found no evidence of a pass-through from exchange rate fluctuations to office or industrial rental values.
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