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.”
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. “
“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.
“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.
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 2016 revenue). The Company has approximately 75,000 employees and serves real estate investors and occupiers through approximately 450 offices worldwide (excluding affiliates). CBRE offers a broad range of integrated services including project management; property management; investment management; valuation; property leasing; strategic consulting and research and consulting. In the Czech Republic, CBRE has almost 350 employees and manages nearly 70 commercial premises with a total area nearly 1.2 mil. sq. m. Read more at www.cbre.cz.