Investors still have faith in Czech offices, warehouses and retail – but the preference is for smaller properties

From April to the end of June, offices, warehouses and retail properties changed hands for €260 million in the Czech Republic. Compared to the first quarter, with a result of €917 million, this is a decrease in terms of total value – but the trend in the number of real estate deals is the opposite. There were 18 deals in the second quarter compared to 13 in the first. During the first half of this year, the volume of investments increased by 48% year-on-year to €1.18 billion. These results were published by the real estate consulting company, 108 AGENCY.

Due to continued, heightened uncertainty about future developments and the deteriorating economic outlook, some investors have taken a more cautious approach. In the second quarter, there are no larger transactions of over €100 million, states Lenka Šindelářová from the investment department of 108 AGENCY. Its analysis shows that, in the second quarter, smaller transactions of up to €20 million prevailed. Nine were up to €10 million and six in the €10-20 million range.

Among the most significant real estate transactions was the sale of the Tesco retail portfolio to the Adventum Penta fund – in the Czech Republic, it involved four buildings. The sale of the office building under construction Red Court in Prague's Karlín to BlackBird Real Estate also figured highly. In addition to these larger transactions, several sales of smaller retail parks or warehouse and production spaces were realised.

Czech funds and real estate companies continue to dominate investment with a 53% share, followed by Slovak capital (18%). It remains a constant that domestic market investors have faith. The investment spectrum was dominated by retail property transactions (33%), followed by industrial/warehouse properties (29%) and offices (26%).

Despite the market decline, we still expect that this year's investment volume could exceed €2 billion. In the second half of the year, some larger transactions, which are currently under negotiation, will be implemented. Yield rates remain stable for all types of real estate, adds Lenka Šindelářová.

108 AGENCY continues to register the ongoing trend of project and land acquisitions for development and real estate for reconstruction. In the second quarter alone, the 108 AGENCY investment team sold land with a total area of 305,000 sq m.