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Opportunities: Real Estate |
The information below is provided
by Prague Business Journal
www.pbj.cz
Last year saw a slowdown on the office
space market, but expectations for this year are more
optimistic as yield in Prague remains fairly high and
more foreign investment inflow is expected, real estate
agents said in their 2001 market overviews.
King Sturge and Cushman &Wakefield Healey & Baker,
international property consultants, blame the office market
slump on recession and the terrorist attacks in the U.S.
last September. "Business decisions, including property
decisions, were put on hold as a result of a general slowdown
in the U.S. and Western European economies and the events
of September 11," said Andrew Thompson, head of the
office team at Cushman &Wakefield Healey & Baker.
Colliers International saw the cause of the slowdown as
more mundane: that most of the branches of multinationals
have taken leases on space in previous years.
Although estimates of the amount of new office space created
last year vary from 50,000-60,000 square meters, that's
50 percent less than was created the year before. Jones
Lang LaSalle said it was the smallest increase since 1993.
"This was partly a result of construction delays-like
in Andel in Smichov, and partly because 1999 saw the biggest
increase in new office space development and it was followed
by a high vacancy rate in 2000," said Blanka Vackova,
research analyst of Jones Lang LaSalle. At the same time
she added that expectations for this year are fairly high
again, up to 100,000 square meters.
Majority of the office deals takes place in the capital.
The total office space available on the Prague market
is estimated at 976,000 square meters. Prague 8 turned
out to be the most popular district, accounting for a
quarter of the total 127,000 square meters of last year's
office purchases/leasing.
"We are very optimistic about the market trends in
business districts such as Prague 4, 8 and 5," said
Dan Jirasek, office market specialist of Colliers office
in Prague. In fact one of last year's biggest deals was
in Prague 8: the 7,174 square meters of the IBC Square
building next to the Hilton hotel was pre-leased to KPMG.
In the city center, rents vary from E17.4 per square meter
per month to E20.5, non-central rents start at E13.3 for
class A office premises. Since many of the best deals
have been taken in the capital, development activity is
shifting also to other locations such as Brno, Plzen and
Ostrava. Between 2002 and 2007 some real estate agents
expect more then 140 major retail clients in need of site
in the country.
The industrial market continued to grow last year, with
the perennial favorites near Prague's Ruzyne airport and
outside Prague along the D1 motorway linking the capital
with Brno. At the same time, Brno's importance as a secondary
distribution center location began to increase. The third
biggest city, Ostrava, is expected to draw the kind of
attention that Brno has been getting, since it can serve
for distribution regions of Poland and Slovakia too.
The residential sector also experienced a steady increase.
With mortgage rates more affordable than ever before,
the residential sector is expected to continue to grown
in 2002. With low interest rates, mortgages became more
feasible for a great number of Czech families.
Brent Watkins, managing director of Colliers, said that
Prague is still very popular among foreign real estate
investors. "Prague is by far the choice of investors
looking for eastward expansion."
Meanwhile, the issue of rent deregulation, which will
have an enormous impact on the residential market, remains
unresolved. Czech Ombudsman Otakar Motejl has asked the
Constitutional Court to rule on a Ministry of Finance
decision to raise regulated rents by up to 7 percent this
year.
The latest problems stem from the failure of successive
governments to get to grips with the housing market and
replace the current two-tier system of regulated and non-regulated
rents with a system of market-based rents. Every third
family lives in a rent regulated flat.
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