The expected recovery of the Czech investment market did not happen in the third quarter, as the increased real estate volumes seen during 2011 did not carry through to 2012. The Eurozone crisis in addition to deleveraging in the banking sector continues to hamper the property investment sector, according to Colliers International’s recent Investment Overview. The €354m in investment transactions that closed by the end of Q3 2012 were down by 80 percent y-o-y.
The office sector continues to be the most popular harbor for investor’s capital, totalling 67 percent of the deals to date. Prime yields have remained flat at 6.5 percent, with not many prime properties changing hands this year. Local capital continues to dominate with 50 percent of deals closed in the third quarter by Czech investment groups. Of the German open-ended funds active on the Czech market only DEKA purchased Skanska’s City Green Court office project in Prague 4 for €54m.
“The length of time it takes to conclude a transaction has increased due to investors being more stringent in their due diligence and the challenges of securing debt finance,” said Chris Sheils, Director of Investment at Colliers International Czech Republic. “However, the Czech Republic remains a target market for a number of investors seeking prime assets or value-add opportunities that through active asset management are able to deliver an increase in capital value.”
