Last year proved that domestic commercial properties are still in excellent condition. According to our comparative analysis, the local economy is more stable in several comparison parameters than in Germany, France, the United Kingdom and the Netherlands. This could lead to a further influx of investment capital. The analysis was originally prepared for this year's MIPIM fair in Cannes.
If there is one figure which is particularly remarkable for foreign investors and traders, then it is the share of Czech capital in investment transactions. Last year, domestic investors acquired properties to the value of almost €1.25 billion through retail and “qualified” funds or companies. This is 40% of the total volume of €3.1 billion, which is the third best result after 2016 and 2017.
Czech investors currently have quite a considerable appetite. In the final quarter of last year, 2 of the 4 largest investment transactions of the year were completed: Investika purchased the Butovice Gallery for €86 million and one of the Wood & Co. funds invested €50 million in the GreenLine office building.
Equally interesting is the forward purchase acquisition of the Astrid Office project in Holešovice (developed by UBM Bohemia) by the Portiva real estate fund. Construction of this 3420 sqm project started at the end of last year, and their entry into the project evidences the lack of quality investment products on the market.
As a result of this, we still see considerable pressure on the rate of return. For these offices, the yield fell to 4%. However, higher selling prices are reflected in the de facto returns for all types of real estate. One example is the sale of the Amazon distribution facility in Dobrovíz to the Korean fund Samsung Securities Limited, which produced a record low yield of 4.25% for industrial properties. The average in this segment is around 5%.
Several major transactions took place between hotels in Prague last year. The reason for this, amongst other things, is their increasingly improved performance and rising prices. Hotels accounted for 17% of the total investment volume in 2019.
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