Commercial property investment in the Czech Republic reached €237 million (£203 million) in the first three months of 2013. This figure represents a 12-fold increase from the same period in 2012, when only one transaction closed.
Petr etr Sulc, head of DTZ’s office in Prague, told Property EU; ‘We have a good pipeline of sales which should close in the next quarters and we believe the investment sector will remain strong for the rest of the year.”
Office property transactions accounted for the majority of the investment market in the first three months of the year. SEB sold the Andìl Park B in Prague 5 to a fund managed by GLL Real Estate Partners, and Trianon Office Centre in Prague 4 was sold to Reico, the real estate fund of Èeská spoøitelna. Its previous owner was Union Investment Real Estate.
Even though the Czech market is relatively small compared to Poland, it is generating a similar level of activity at present, Sulc pointed out.
The largest property currently on the market is the Park office complex located in Prague 4. It is owned by the German funds Degi Europa, Degi International and Degi Global Business. If completed, it would be the biggest transaction of the year.
Sulc says that tenants currently have the upper hand in the current property market and that it is common practice to renegotiate leases several times, even in prime markets like Prague 1. He expects that these renegotiations will continue going forward, as corporations “continue to rationalise their business.”
The vacancy rate in the market increased in the first three months of 2013 to 13.1 per cent from 12 per cent in the fourth quarter of 2012. According to data released by DTZ, there is 377,000 sq metres of vacant office space in Prague. This level of square footage represents the highest volume in the city’s history.
A limited number of projects are due for completion over the coming months. The largest is the Florentinum office complex. It will bring 46,000 sq metres onto the market in Prague 1. This development is 55 per cent pre-leased and is being developed by Penta Investments, a local group.
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