According to Savills research, Q1 2024 real estate investment volumes in the Czech Republic are forecast to reach approximately €350 million and European real estate investment volumes approx. €34 billion. Savills forecasts that year-end investment volumes for the Czech Republic will exceed €1.5 billion and for Europe €177-182 billion. This would mark a considerable rebound in investment volumes, up by 19 percent and 22 percent respectively on the €1.25 billion recorded in Czechia for 2023 and €149 billion for Europe.
Fraser Watson, Head of Investment at Savills CZ & SK, commented: “From the beginning of the year we are noting a lot more owners coming forward to put their hands up to say “we are a seller“. The primary reasons for this are that interest rate rises appear to have stopped, bringing in a great degree more certainty overall to the market. Along with the fact that there are enough other transactions that have happened that give some confidence in where pricing is at, as well as the general feeling amongst investors that the market has already reached the bottom.”
The ability to achieve desirable yields on investments has been very complex in 2023, leading to strong outward yield movement across all real estate sectors, says Savills. However, the international real estate advisor believes that the expected decline in central bank rates will provide a boost to investment activity later this year and will generate a stabilisation of yields from H2 2024 onwards. Savills expects that yields in the Czech Republic will broadly hold firm throughout 2024, with forecasts for prime office yield remaining at 5.25 percent, prime industrial yield at 5.25 percent and prime retail yield at 6.5 percent.
“There’s a level of confidence in the market that prices now are probably about where they’re going to settle. I think FOMO (the fear of missing out) in 2024 is possibly going to creep back into the market — probably in the 2nd and 3rd quarters — as investors see there’s a greater level of activity being done by other investors which will push them back into the market,“ added Fraser Watson.
Tristam Larder, Head of European Capital Markets at Savills, said: “As the gap in buyer and seller price expectations is beginning to close, we anticipate seeing a gradual resurgence in investment activity from H2 2024 onwards. Logistics and multifamily will remain the preferred asset classes in Europe this year, although there is a growing appetite for retail properties and given recent price adjustments, we are also seeing more and more investors enquire about offices.”
