Year-End Surge May Boost Czech Commercial Real Estate Investment by 40%

According to Savills Investment Report, the commercial property market in the Czech Republic is expecting a strong close to 2024. The total transaction volume for the first three quarters of 2024 reached €1.09 billion. Although year-on-year investment volume remains nearly the same, the final months of this year could contribute almost 40 percent of the current transaction volume, potentially exceeding €1.5 billion. The residential sector continues to maintain its momentum, recording a 131 percent year-on-year increase in volume over the first three quarters.

Fraser Watson, Head of Investment at Savills, says: “Currently, there are a handful of major deals on the Czech market – either already in exclusivity or the marketing phase led by agencies. These transactions cover all major commercial real estate sectors, including office, industrial and retail. Most of the interested parties are Czech, but we are also seeing foreign investors returning to the local market.”

It may seem as though large properties have suddenly come onto the market “all at once”. However, many of these properties were planned for sale over the past years, but wider market conditions were not so favourable. Owners held on to their assets for longer than forecast in business plans until they sensed an improvement in market conditions and gained confidence that they could attract investors. None of the major opportunities currently on the market are being sold under significant pressure and we are not seeing distress situations in general.

“Of the total investment volume recorded since the beginning of the year, retail accounted for 31 percent, industrial properties represented 22 percent, and offices held a 20 percent share. The residential sector has maintained its strong momentum, accounting for 19 percent of this year’s investment volume so far, with residential transaction volumes up by 131 percent year-on-year,” adds Vojtěch Wolf, Senior Investment Analyst at Savills.

Since the beginning of summer, investor confidence in the real estate market has noticeably improved. This is driven by expectations of decreasing financing costs and the sense that we’ve reached the bottom of the cycle, implying that prices are likely to rise.  Additionally, returns on cash held in banks have significantly declined for domestic investors due to rate cuts by the Czech National Bank, prompting them to reinvest capital into real estate assets. “We are confident that the market’s momentum at the end of this year will carry over into 2025,” concludes Fraser Watson.