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Czech industrial properties in the spotlight of Chinese companies

This transaction ranks among the largest single industrial transactions of this year. Chinese concentration on the Czech market is expected to continue as there are several other major transactions currently underway.

Peter Kolenčík, Senior Consultant 108 AGENCY, says: „Currently, Chinese companies operating in the Czech Republic are mainly engaged in logistics and e-commerce sector. They are expanding from Western Europe, where they already have well developed facilities. To some extent they follow the moves of their global competitors. A good example is Amazon, which opened its warehouse in Dobrovíz near Prague about two years ago. In mid-2017, in the Jeneč area near Prague, the logistics operator of his Chinese rival Alibaba signed the lease as well.

Jakub Holec, Partner 108 AGENCY, adds: „Chinese companies that are currently interested in the Czech industrial real estate market have already signed business contracts with Czech or German companies and need to start providing their logistics services or production as soon as possible. They act mainly as subcontractor to automotive industry or e-commerce. Great interest in the lease of industrial premises is monitored in Prague West or North-Western Bohemia. An example can be BWI, the Chinese manufacturer of shock absorbers for luxury automobile brands, which began its production at 15.000 sq m in Panattoni Park Cheb in the autumn of 2016.

Meeting multiple Chinese partners interested in entering the Czech market was the main purpose of a two-week business trip undertook by the representatives of the real estate consultancy 108 AGENCY. The aim was the introduction into the business environment and legal conditions in the Czech Republic and providing them with the update on the domestic industrial property market.

As concluded by Peter Kolenčík, Senior Consultant 108 AGENCY: “Many Chinese companies seeking to establish in the Central Europe are talking about value-added production using modern technology and their know-how. The necessary condition for their expansion is, however, the appropriate infrastructure in place. They expressed their interest to allocate their investment into the Czech Republic, Poland and eventually Western Slovakia. Chinese companies are basically following Japanese companies that have successfully established themselves in our market at the turn of the 1990s and millenium.

ThreelargestChinesecompanies in Czech warehouses

As it has already been said, the well-established tenants of the Czech logistics real estate market are Japanese companies operating in both the production and logistics. Indisputably the single largest Japanese investment in the Czech Republic is the car factory in Ovčáry near Kolín, operated in consortium Toyota-Peugeot-Citroen Automotive (TPCA). Other major Japanese manufacturing companies in the Czech Republic include AGC Automotive Czech (glass production for automotive industry based in Chudeřice by Bílina), Daikin Industries (production of air-conditioning in CTPark Pilsen) and Denso Manufacturing (production of air-conditioning units for the automotive industry in the industrial zone Liberec South). The largest Japanese logistics companies include Yusen Logistics, Sumisho Global Logistics, PST CLC and Esa Logistics (member of Hitachi Transport System Group).

About the Czech Industrial Real Estate Market

In mid-2017 (end of Q2), the total stock on Czech industrial market totalled on 6,62 million sq m. The average vacancy rate was reported at historic minimum of 4,1 %, indicating the excess of demand over supply. Prime rents of modern premises in Prague were at the level of 3,60 4,50EUR/m2/month, respectively 4 4,70 EUR/m2/month in Brno. Year-on-year rents (Q2 2016 vs. Q2 2017) rose by an average of 5 %.