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CBRE: Czech private real estate investment groups are strengthening

Currently, there are roughly 50 groups and growing rapidly.

• Investors are seeking investments with acceptable risks, earning 5 – 6% annually in the long term.
• They are looking for offices or retail spaces with long-term leasing contracts.
• They are concentrating their investment in Prague – primarily in office projects.
• There is an interest in retail real estate across the Czech Republic.

CBRE sees a strengthening group of private investors on the Czech market that was previously saturated mainly by well-established investment groups. There were only about 10 – 15 groups of Czech private investors going to the market. Today, there are about 50 of them and rapidly increasing. 

“The entities are either those established private investment funds of qualified investors or private groups of three to five wealthy individuals, each of them providing funds in the amount of  50 – 100 million CZK. These groups have initiated investments in those real estate projects large groups are not interested in due to its low investment volume,” said Jan Hospodář, Head of Sales & Acquisition at CBRE.

These investors are secured with their needs covered. Therefore, they are not primarily interested in high-risk investments that make 15% a year, but rather they are looking for for long term and less risky investments, securing roughly 5 - 6%. These investors fund such transactions by their long-term business activities.

“Investing in real estate has a place in each investor’s portfolio. The current interest rates attract investment in real estate and,  in comparison, still have an interesting higher value not solely to Czech private investment groups,” said Lukáš Vácha, Member of the Board and Business Manager for Institutional and Private Clientele at Conseq. 

Groups of private investors looking for commercial office or retail properties with long-term leasing contracts can expect profits at around 8 – 9%. They are interested in Prague’s office spaces as well as retail properties across the Czech Republic.

There are similarly focused clusters of investors present abroad, competing for the same product within transactions.