News

CBRE: We expect the retail sector to dominate the Czech market in 2015

Retail transactions worth EUR 800 mln. are currently in final negotiation and expected to close in H1 2015

• 2014: the largest volume of transactions was in the industrial sector.
• 2015: the largest volume of transactions is expected in the retail sector.
• Average deal size increased from EUR 35.5 mln. in 2013 to EUR 42.4 mln. in 2014.
• Total investment volume in 2014 amounted to EUR 1.992 mln., up by 52% y-o-y.
• The largest volume of transactions in CEE was in the office sector (the y-o-y increase amounted to 61%).   

CBRE, the world leader in commercial real estate, predicts a new wave of investment in the real estate market. Large scale investment predicted in the retail sector where the finalization of three ongoing transactions worth EUR 800 million is expected. In 2014, six transactions worth EUR 314 million were concluded in the retail sector. In addition to Prague, demand is expected to spread to the regions as well.  

Despite the tough start, 2014 was one of the most successful years in terms of investment volumes. Higher activity in commercial real estate investment in 2014 was the consequence of several favourable market conditions, such as low interest rates, surplus of capital and motivated sellers.

Richard Curran, Managing Director CBRE, says: “While 2014 was especially the year of investment in industrial real estate, 2015 will mainly give the green light to the retail sector. At the moment we are aware of three transactions worth ca. EUR 800 million in final negotiation stages and other investment projects are in the pipeline. CBRE is currently involved in three shopping centre deals. Two are about to close within few months and we are about to launch a sale of another shopping centre shortly.” 

The biggest transactions on the market

The market recovery is noticeable. In 2012, 21 transactions were concluded on the Czech market; in 2013 the figure was 37 and in 2014 47 transactions were finalized with the average price of transaction increasing from EUR 35.5 million in 2013 to EUR 42.4 million in 2014.  

Jeff Alson, Head of Capital Markets CBRE, says: “The largest deal of 2014 and the second largest in the history of the market was the acquisition of the VGP portfolio by PointPark Properties – P3, where CBRE advised the buyer. “

Investment is driven by foreign capital  

Foreign capital accounted for 83% of overall purchases in 2014, the remainder being domestic buyers. American capital was the most prevalent in Czech commercial real estate, accounting for 37%.

Commercial real estate investment in Central & Eastern Europe (excluding Russia) rose 28% year-on-year and reached just over EUR 7.7 billion in 2014. There was a marked increase in investment activity in Czech Republic, Hungary, Romania and Slovakia with percentage growth figures of 52%, 71%, 220% and 72% respectively. The total of these four countries, €4.1billion, equates to over a half (53%) of total CEE volumes in 2014, compared to 37% in 2013.  

Prague comes first but interest in regions is growing as well

Although most transactions across all sectors (industrial, retail and office space) in 2014 were in Prague, interest in the regions is growing. For example, in Hradec Králové, shopping centre Futurum was purchased by Meyer Bergman for EUR 87.6 million from Heitman, GE Capital and TK Development (CBRE represented the sellers). In the same period, a transaction worth EUR 83 million was finalized in Pardubice where Atrium European Real Estate bought the AFI Palace Pardubice shopping centre from AFI Europe.

_____________________________________________________________________________

About CBRE

CBRE Group, a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees and serves real estate owners, investors and occupiers through approximately 350 offices in more than 60 countries worldwide (excluding affiliates). CBRE offers strategic advice and execution for real estate sale and lease, corporate services, facility and project management, real estate appraisal, development services, investment management and research. In the Czech Republic CBRE have nearly 350 employees. In the Czech Republic CBRE manages nearly 200 commercial premises with a total area nearly 1.2 mill. sq. m. Read more at www.cbre.cz.