Several strong impulses await the investment market

The volume of real estate transactions in the Czech Republic should approach the usual EUR 2 billion this year. This is indicated by several large deals negotiated in recent weeks. Domestic capital remains the main driver of the investment market - notable is one of the biggest changes of ownership in recent times, the sale of OC Arkády Pankrác, which was acquired by the Czech real estate fund Trigea from the Partners group. The deal will not be reflected in the investment balance until this year due to the review by the Office for the Protection of Competition. According to real estate consultancy 108 REAL ESTATE, this will not be the only retail property: the evergreen retail parks will be complemented by the acquisition of several shopping centres or shopping malls.

"Investors are taking advantage of price compression in some retail properties that have not experienced the strongest years. And they believe in the growing consumption of households that have record savings and the prospect of rising salaries," comments Jakub Holec, Director of 108 REAL ESTATE. There are also several pre-agreed transactions in the office and industrial areas. The expected reduction of interest rates by the Czech National Bank will become a major impetus for the acceleration of investments.

The growing activity of the investment market is also evidenced by the end of last year. In three months, 16 transactions were concluded, which is an above-standard number. Czech capital was the overwhelming driver - whether through real estate funds, investment groups or private individuals. The object of their interest is not only traditional real estate segments, but also residential buildings - apartment rental houses, housing for students or seniors. In fact, their transaction volume almost equaled the office sector in the last quarter of 2023.

A number of investment companies have declared their willingness to buy. This is due to corrections in the price levels demanded by existing owners as well as the robust funds accumulated. "The vast majority of deals are done using external bank financing or are subsequently refinanced by banks. Therefore, the interest rate is a crucial parameter. Due to the expectation of a more substantial decline, a number of pre-negotiated transactions are accelerating," adds Michal Diviš, Head of Investment Department at 108 REAL ESTATE.

Another significant impulse will be the release of production and industrial facilities or the slowdown of production in some segments. This is mainly a reaction of foreign owners to high energy prices - according to 108 REAL ESTATE, they are mostly heading to Poland or the Balkans. There are, however, a number of companies that are consolidating their European or global capacities in the Czech Republic.

"Given the sale-and-leaseback product, we have very comprehensive information on this sub-segment. An increasing number of companies are getting rid of their surplus real estate and opting to lease or relocate to more modern, more efficient and, as a result, more affordable premises," explains Darek Vodehnal, Senior Associate of the Investment Department at 108 REAL ESTATE.

Developments in the industrial space market should also move sellers and buyers. There has not been a major industrial transaction for more than a year. However, several changes of ownership are currently close to completion. And warehouse and manufacturing space should once again make a more significant contribution to the investment balance - similar to the more noticeable interest in hotels and accommodation facilities or the aforementioned shopping galleries and centres, often on shopping streets.

We expect a significant inflow of foreign capital into domestic real estate. The Czech Republic is still considered one of the most reliable ports for investment," concludes Jakub Holec.