Commentary on Q1 2024 Marketbeat Report: Investment Overview

Investment Volume

In Q1 2024, the Czech real estate market saw an investment volume exceeding €340 million. While this is a 24% decrease year-on-year and a 92% increase from the previous quarter, it does not signal any trend or really mean anything. The transactional activity in Czech is so limited that one deal can completely derail the statistics. Therefore, it is important to understand the detail behind the numbers before claiming that there are any trends in the data.

Significant Transactions

One of the most noteworthy transactions this quarter was the Arkády Pankrác shopping centre sale to Trigea, a Czech investment fund. This deal, the largest since 2016, highlights local capital's growing confidence and strength. This sale showcases the maturity and capability of local funds, handling high-value transactions independently and efficiently.

Prime Yields

Prime yields have compressed, with industrial assets at 5.15% and retail high streets at 5.40%. Our current call is that the Czech Republic's market has found its bottom in most sectors, and the deals we will see in the next 18 months should gradually move prime yields downwards.

Rising Residential Investments

There's also a notable rise in residential rental housing investments. Significant acquisitions, such as the Rezidence u ?árky and Waltrovka projects, highlight that the sector is becoming a viable alternative rather than an exotic exception. Investors will increasingly underwrite its long-term value growth and stability.

Conclusion

The resilience of the Czech real estate market is evident despite economic challenges. Local investment activity and a general lack of new supply, as predicted, are driving this resilience. As Czech funds' inflows grow they will have to find ways how to invest; our expectation is that they will focus on retail, residential-for-rent and, selectively, industrial, all in Czech, rather than necessarily diversifying geographically.