CBRE has released the Czech Republic Real Estate Market Outlook 2018 for investment, office, industrial and retail sectors.
Richard Curran, Managing Director at CBRE, said: “We expect the Czech economy to remain strong in 2018. Although wage costs are rising, companies are continuing to expand, which is good news for the office and industrial sectors. As wages are rising faster than inflation, people have more disposable income which will have a positive impact on the retail sector.”
Investment: Currently, CBRE is monitoring almost 40 transactions with a total volume in excess of EUR 2.4 billion which could be closed in 2018. The investment market should be clearly driven by office and retail transactions which together could account for 88 percent of total investment volume. 60 percent of 2017 investment transactions were transacted in Prague, but in 2018 we expect to see an increased volume of transactions in Prague, which could account for 70 percent of the total volume. CBRE forecasts that investment volumes in Prague in 2018 will be driven mainly by the office sector, whereas more than 50 percent of total investment volumes in the regions will be derived from shopping centre transactions.
Office: CBRE forecasts take-up will once again exceed 300,000 sqm in 2018. Currently, there is more than 300,000 sqm under construction in 25 projects, out of which almost 190,000 sqm is scheduled to be delivered to the market in 2018. There is no new development scheduled to be delivered in the city centre in 2018. CBRE currently observes a trend of longer leases in cases where a company is leasing 2,000 sqm and more. Growing importance of quality and advanced technologies, economy of the building, green certification is very important mainly for global corporations (LEED, BREEAM or DGNB). Intelligent buildings, sufficient facilities for runners and cyclists, or even a shared gym for employee use, support of electromobility will became also very important to meet needs of employees.
Industrial & Logistics: E-commerce, in particular, is a demand accelerator as the handling of a product ordered online can require up to three times more space than a conventional sale. Logistics companies (largely serving retail) and companies from the automotive sector are expected to remain as the predominant drivers of demand. In terms of new supply, CBRE expects that in 2018 there may again be around 700,000 sqm delivered to the market (the same amount as in 2017). CBRE expects to see expansions of existing parks. Besides that, CBRE sees the growing importance of locations in the North-West of the country such as Usti and Labem, Karlovy Vary, Most, Chomutov, Cheb as the Czech Republic has been increasingly popular with companies serving Germany and Western Europe.
Retail: In 2018 CBRE expects that for the first time in a reporting period no new shopping centre will be opened. On the other hand, CBRE expects, two new shopping centres and one expansion to start construction: Borislavka (10,000 sqm) and OC Letna (13,000 sqm) in Prague and Avion Shopping Park in Brno (phase 3) (13,200 sqm). Additionally, CBRE will see two specialized centres – Outlet Arena Moravia (phase 1) (11,700 sqm) in Ostrava and Prague The Style Outlet (20,000 sqm) – opening in 2018.