The Czech market witnessed a continued steep fall in transaction volumes in Q2 2009, making it the weakest quarter in six years, DTZ said in its latest Investment Market Update for the country. At the same time, the property adviser registered a tangible increase in the level of interest from a small
The Czech market witnessed a continued steep fall in transaction volumes in Q2 2009, making it the weakest quarter in six years, DTZ said in its latest Investment Market Update for the country. At the same time, the property adviser registered a tangible increase in the level of interest from a small
number of institutional investors and open-ended funds, which are actively placing bids on properties in good locations.
DTZ said there has also been an increase in the number of domestic-based opportunistic investors attempting to acquire well located properties at discounted prices.
Total investment volume in Q2 2009 amounted to around EUR 18 mln, a 96% drop on the year-earlier period and a 61% decline compared with Q1 2009. Only two investment transactions were recorded in Q2 2009; the purchase of the Valdek office building in Prague 2 by an Italian investor; and the sale of Parizská 23 in Prague 1. DTZ mediated the sale of the Parizská property, a mixed-use development with office, residential and retail accommodation.
Prime yields currently stand at around 7% for offices and retail, and above 9.5% for industrial/logistics. Key issues raised by purchasers during recent negotiations include latent capital gains tax liabilities, rental guarantee structures and a preference for asset deals. This illustrates that the Czech market has shifted from a vendor to a purchasers market, DTZ noted.
The majority of international investors have shifted their primary focus to Prague, according to the adviser. Assets in non-established locations with low specification will suffer most during the coming 12 months, it predicted.
