Czech industrial market reached its peak in 2007, says C&W

A period of over 10 years of industrial property market growth will end in the Czech Republic this year, according to a research report released by property services firm Cushman & Wakefield. Approximately 640,000 m² of industrial space are expected to be completed this year in the country, a 30% decrease on 2007 volumes, but still significantly higher than levels in 2006 (540,000 m2).

'Whereas the surrounding countries - Poland, Hungary, and Slovakia - will probably achieve record results this year, the Czech market peaked last year. The slowdown in our country became apparent in the first half of the year, primarily due to the restricted inflow of international investment. The global crisis added to this in the second half of the year,' said Ferdinand Hlobil, head of the Central European industrial team at C&W.

'Since the mid-1990s, the market had expanded by up to tens of percent every year and the slowdown had to come one day,' Hlobil added.

The third quarter of this year saw a reduction in speculative construction (i.e. construction of property for which lease agreements are not executed before the start of construction) as a direct consequence of the global economic crisis.

'It is not unusual today for future tenants to come with their own projects, seeking a developer that will build it for them. But we have encountered logistic projects stopped by the tenants since about early November. There are two types of reasons - either the users/tenants are unable to secure the finance for the new project, or their parent companies are halting the projects expecting a deterioration of results,' Ferdinand Hlobil said.