Real estate investment in the Czech Republic is the strongest in the past five years
More than €900 million worth of property changed hands in the Czech Republic from January to the end of March this year. This is the strongest first quarter since 2017, excluding Q1 2020 exceptional residential Residomo portfolio sale. According to the analysis by 108 AGENCY, the real estate consulting company domestic buyers dominated by volume followed by Slovak capital. Major transactions included Bořislavka Centre in Prague 6, the IGY shopping centre in České Budějovice and the City Park Jihlava.
“Nevertheless, given the current geo-political situation and uncertain economic development, we expect a slower pace of investment activity for the rest of the year. Investors may adopt more risk-averse investment strategies, but this is why investing in stable, fully let assets may represent an attractive anti-inflationary investment target,” commented Jakub Holec, CEO of 108 AGENCY. He estimates that the total investment volume could exceed €2 billion this year. Last year it was €1.77 billion.
A 53% increase compared to the last quarter of 2021 and almost three times more than in the first quarter of 2021 – these are the results of the investment market in the Czech Republic in the first quarter of this year. The best balance in the past five years was marked by several significant premium real estate transactions. In addition to the aforementioned shopping or multifunctional centres, they also include the purchase of four warehouses in Central Bohemia by the Hines European Core Fund (HECF).
According to Lenka Šindelářová from the 108 AGENCY investment advisory team, yields have remained stable in the first quarter of 2022. A marginal yield compression is still likely in prime industrial and office segments this year on the back of rental growth. Prime industrial yields moved in to historical lows of 4% last year, surpassing retail and overtaking offices. Retail real estate yields should remain unchanged.
“It's a question of how the situation in Ukraine will affect further developments in the real estate investment market. At the same time, the attitude of owners, as well as investors, is influenced by the unstable and inflation-affected economy. Inflation, accelerated by rising energy prices and supply chain disruptions, could reach double-digits this year,” adds Lenka Šindelářová.
The growing impact of sustainable and responsible investment – ESG – is also much more pronounced. Due to rising energy prices, real estate owners who have invested in environmentally friendly technologies or renewable energy sources are gaining an advantage.
108 AGENCY also registers a continuing trend for the acquisition of development land, with a zoning decision or with a building permit, in Central Europe. Last year alone, the 108 AGENCY team secured a total area of over 660,000 sq m for new landowners. This ranks the company among the leaders in the domestic market. The buyers are mainly development companies in the segment of industrial premises, but also investors speculating on the rising price of this asset.Back