Czech investment volume could exceed €3 billion boundary in 2017
CBRE has released its Czech Republic Real Estate Market Outlook 2017 for investment, office, industrial and retail sector.
Richard Curran, Managing Director at CBRE, said: “The performance of the Czech real estate market shows no sign of slowing down in 2017. We believe leasing and investment volumes will continue to rise in line with the continued strong macro economic performance of the country. This is the place to be in 2017.“
CBRE continue to forecast further downward pressure on prime yields in investment sector, however the speed of yield compression will slow. Currently, we are monitoring more than 50 ongoing transactions with a total volume in excess of €3.3 billion in various stages of negotiations which could be closed in 2017. According to our forecast, more than 50 percent of total investment volumes in 2017 may be coming from the regions.
On the Prague office market take-up will be constantly driven by companies’ relocations and expansions. Higher amount of newly delivered office space should lead to short-term slight increase in vacancy rate. Average headline rents in some of the most in demand locations may slightly increase due to the temporarily limited amount of available space. Currently, there is 178,800 sqm in sixteen projects under active construction scheduled to be completed in 2017. All of them are located in established office locations such as Butovice-Stodulky, Pankrac-Budejovicka and Karlin.
The industrial and logistics market will continue to be driven by the logistics, e-commerce and automotive sectors. Decisions on location will be increasingly be determined by the availability and cost of labour. Besides new XXL warehouses, we expect to see an increase in requirements for much smaller, lower specification, innercity or so-called last mile delivery facilities.
Retail Market stability is supported by the fact that there is a small number of new shopping centres coming to the market and retailers are able to better predict to which centres to expand. In 2017, we expect prime rent to grow further as there is hardly any prime space available. In 2017, three new shopping centres are scheduled to be completed: Central Jablonec, the expansion of Centrum Chodov in Prague and the expansion of IGY Ceske Budejovice. Besides new shopping centre openings, we expect three new shopping centres to start construction: Borislavka (10,000 sqm), Palac Stromovka (13,000 sqm) in Prague and Avion Shopping Park in Brno (13,200 sqm). Additionally we will see one specialized centre – Outlet Arena Moravia (11,700 sqm) delivered.