French civil service pension fund ERAFP has made its first real estate investment in the Czech Republic, with LaSalle Investment Management buying retail and office space in Prague for some €80m on behalf of the pension fund.

The acquisition is of three buildings on Prague’s main shopping street, Na Příkopě, combining more than 4,000sqm of retail space and an office unit of some 3,000sqm.

LaSalle bought the properties from a private owner for around €80m, according to a statement.

It represents ERAFP’s first acquisition in the Eastern European country, according to a spokesperson at the pension fund.

Na Příkopě is in what is known as the Golden Triangle in Prague, which, according to Beverley Shadbolt, fund manager at LaSalle Investment Management, is one of Prague’s most sought-after retail locations.

“Na Příkopě street is a ‘landlord’s market’, with tenant demand far exceeding supply of lettable space,” she said.

“Given the prime location of the assets, combined with sustainable existing rents and an attractive value uplift opportunity, we are confident it will produce attractive initial yields versus comparable transactions in Western Europe.

“Central European economies are among the best performing in Europe at the moment, the markets are liquid and offer good continued prospects for investors.”

LaSalle recently bought its first German real estate assets for ERAFP, in Munich.

Closer to home, the pension fund recently acquired an office building in Lyon, via investment manager AEW Europe.

ERAFP made its first property investment in 2012 but has since last year been looking to increase its investment in real estate, in part for diversification.

Besides Germany, France and now the Czech Republic, ERAFP has also made real estate investments in Finland, Spain, Sweden and the UK.  

Real estate total returns rose markedly in the Czech Republic and Hungary last year, according to MSCI, in contrast with a slowdown in some of Europe’s other property markets.