So far Korean investment in Prague has been focused on offices, but elsewhere in Europe they have also been acquiring logistics stock.
1.7 billion EUR is the value of commercial real estate that was transacted in the first half of this year. This is an increase of 59% compared to 2018. The second quarter accounted for more than EUR 800 million in this result.
Czech investors remained the most active - they held a 36% share in the half-year. South Korean capital thus came closely second with a 33% share, for whom premium office buildings seem to be a priority. Hana Financial Group acquired the Rustonka I-III (EUR 164 million) in Prague 8 and Main Point Pankrác in Prague 4 (EUR 130 million).
“Koreans like to invest into European real estate and have recently turned their focus also on Central Europe. The Czech Republic is perceived as a stable and mature market and still shows a positive yield spread against the core Western markets despite recent yield compression. Prague’s supply of high quality modern offices, internationally recognised blue chip tenants and the growing cultural connections with Prague via the daily flights to Seoul all fuel the desire for investment. We don’t foresee the weight of Asian money decreasing in the near future, the favourable exchange rate between the weaker Korean Won and the Euro gives the Korean investors a competitive advantage that we don’t see relenting,” explains Stewart Thomson, Head of Capital Markets CZ/SK.
We at BNP Paribas Real Estate are actively involved in several transactions, which should be positively reflected in the final investment volumes at the end of 2019.
In addition to offices, investors also bought into hotels. This is related to the continuing growth in occupancy and the prices that hotels reach in high season and beyond. For example, K + K Hotel Central and K + K Hotel Fénix changed ownership in a large cross-border portfolio transaction.
Also interesting is the acquisition of Industrial Park Teplice and Ostrava by TPG Real Estate Partners for EUR 90 million. It is in the industrial property segment that the highest yields are achieved with around 5.50%.
However, both warehouse space and other market segments are experiencing the weight of capital. Prime yield for offices compressed slightly to 4.25% due to continued strong demand of investors. Yields of about 3.25-3.50% are achieved for high street assets, prime shopping centers are at 4.25-4.50%.
