In spite of the limitations connected to Covid-19, business is moving forward across the real estate segments, with major properties continuing to change owners. The recent sale of the Parkview office building (€77 million) and part of the Arete industrial portfolio (€50 million) are two good examples of this. Several domestic investment groups have announced their interest in buying (for others) riskier retail properties.
Commercial buildings still remain a sought-after asset, despite developments at the level of tenants. This is according to analysis by BNP Paribas Real Estate, the international consulting company, which was carried out based on last year's investment market results. It ended with a final balance of €2.7 billion, which means a 13.5% year-on-year decrease. This above-average result was achieved thanks to the record transfer of the Residomo residential portfolio for €1.3 billion.
"Nevertheless, last year's results exceeded many predictions. Investors have definitely not withdrawn from the Czech market, they are just more cautious and patient. There is still a clear pressure of demand for a number of quality properties. Thanks to this, we don't yet see space for a decline in the yield rate," says Markéta Křížová from the Capital Markets team at BNP Paribas Real Estate, which is actively participating in several investment transactions.
According to all indications, this year should confirm the long-term trend of interest in office real estate. Investors are interested in virtually all types of office buildings which have quality and long-term tenants.
IBC Office Building (photo credit: www.ibcprague.cz)
The same applies to reconstructions and modernisations, which brings opportunities for older buildings. These usually involve a good location, such as last year's sale of the IBC complex in Karlín. Recently activated programs, such as the so called Green Deal, have introduced generous funds to reduce the energy intensity of buildings, as well as the impact on greenhouse gas production.
"Industrial and logistics properties continue to be popular. However, their offer is limited because they are often traded within entire portfolios. However, we also see several active negotiations in this segment and the 7% share of logistics in last year's total volume should definitely be surpassed this year," adds Markéta Křížová. According to her, after last year’s decline, the first hotel sales may appear. It would seem that these will be bought for the purpose of redevelopment to residential real estate.
According to BNP Paribas Real Estate, several acquisitions can be expected in the retail segment. Shopping centres, whose tenants and visitors are affected by coronavirus measures, are in the sights of many investors, and not only those based on opportunism. Even after last year, smaller regional retail parks, which were (and are) sought after mainly by domestic investors and funds, confirmed their resistance to the prevailing uncertainty.
Residential properties remain a separate chapter. Investment groups and funds such as Heimstaden, Zeitgeist and Mint remain active. However, a number of other entities, including pension funds, have declared their readiness to purchase large volumes of older and new flats in development projects. For some, residences, including properties intended for seniors or students, will be the initial entry point into the domestic market.
Although some types of investment fund (mainly foreign) which already operate in the Czech Republic have adopted a wait-and-see attitude, and transactions are being prolonged, activity in the domestic real estate market is not weakening. "The year 2021 will be marked by new approaches and new investors. Unless we experience more turbulence, interest will remain stable. The balanced development of yields for all types of real estate corresponds to this,” concludes Markéta Křížová.
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