The Czech property market attracts local and foreign investors
The Czech property market is experiencing a surge in activity. The second quarter of 2024 was highly successful for it. During this period, commercial real estate attracted investments worth EUR 465 million. In general, experts are forecasting good growth in the sector after some stagnation in 2022.
Based on Colliers’ market analysis, the profitability of prime properties is at a high level. As far as investors’ preferences are concerned, they are actively interested in office properties. Buyers of real estate in the Czech Republic are:
– representatives of Eastern and Central Europe, their share is 77%;
– investors from the Middle East and Africa – 16%;
– buyers from the USA represent 6%.
It is worth noting that not all European investors are open to new projects. Many are still in no hurry to invest or are focusing on assets in other regions. At the same time, this situation creates opportunities for other buyers. They can acquire interesting holdings in the local market or enter the regional market.
Overview of major deals in the Czech property market
The most significant investment in the Czech Republic in the second quarter was the purchase of an office complex in Prague. The 40,000 sqm property in the historic part of the city was sold for EUR 140 million. The complex belonged to Komerční Banka, and the buyer was the capital’s municipality. According to the plans, the City Hall will be here, and the move is due to take place in 2028.
Also worthy of note are the deals in the build-to-rent sector by a group of investors from AFI Europe and MINT Investments. It acquired a portfolio of assets in the Nová Elektra and Vysočanský Mlýn projects.
The largest transaction in the industrial property segment was the sale of a warehouse. The 40,000 sqm facility, located near Chomutov, was previously owned by RSJ. Patria was the buyer.
The office sector attracted the most attention. Investments in this sector totalled EUR 175 million, or 38% of the total capital attracted to the market. Investments in residential properties accounted for 29% and industrial properties for 17%. Property yields remain consistently high. At the same time, the gap between the asking price and the final value is rapidly narrowing.
Property yields
According to Colliers, yields on prime properties on the Czech market are as follows:
– offices yield 5.5% per annum;
– high-quality industrial properties yield 4.5%;
– shopping centres yield 6% per annum;
– retail parks yield about 6.3%.
According to analysts, the market will continue to grow in the near future. In addition to the factors mentioned above, the reduction in interest rates will facilitate this.