The volume of real estate investments in the Czech Republic fell by four-fifths year-on-year to EUR 300 million (CZK 7.8 billion) in the first quarter. The decline was mainly due to the acquisition of the Residomo housing portfolio by Swedish investor Heimstaden for EUR 1.3 billion in the first quarter of last year. Without this trade, the volume of investments would fall by 14 percent.
More than half of all investments in the first quarter were office buildings, a fifth belonged to logistics real estate. Apartments accounted for nine percent and retail space for eight percent. The industry was most interested in smaller shopping parks.
“The fact that the offices had the largest share of investments in the first quarter shows that investors still believe in this type of product despite the continuing uncertainty in the rental market. The offices will continue to be used extensively, and the fact that new construction is relatively limited adds to the product’s attractiveness, “said David Sajner, Head of Real Estate Sales at Knight Frank.
In the first quarter, the Czech real estate market was dominated by local investors with a share of 47 percent in the total volume of trades. Thanks to the Deka Group’s investment in the Parkview building for two billion crowns, the second strongest group was German investors with a share of about a quarter. This was followed by investors from Singapore (17 percent), who bought the Arete Group’s industrial portfolio in the Czech Republic and Slovakia.
“For the time being, we do not expect a major change in current trends. Demand for logistics real estate will remain strong, but the market is not able to satisfy it. In retail, most transactions will consist of supermarkets and retail parks, where demand is comparable to logistics, “added Sajner. It expects a more significant change in the market only with the return of foreign investors, ie with the termination of measures against coronavirus not only in the Czech Republic but also in Europe.
Last year, the volume of real estate investments in the Czech Republic fell by 11 percent year on year to 2.7 billion euros (70.7 billion CZK). It was 13 percent lower than the average for the last five years. The share of foreign investors was about three quarters, in 2019 it was 64 percent.
Source: CTK and Knight Frank
