Investment volumes fall by 60% in the Czech Republic, says DTZ

Commercial property investment activity in the Czech Republic dropped by 60% last year to EUR 1.062 bn, significantly down from the record 2007 figure of EUR 2.65 bn, according to a new research report published by DTZ. The office sector represented the largest share of total investment volumes (62%), followed by retail (18%) and mixed-use buildings (15%).

'Although investment activity decreased significantly year-on-year, the Czech investment market remains one of the most liquid in CEE,' said Martijn Kanters, Head of Consulting & Research at DTZ and co-author of the report.

The report shows that investment volumes dropped significantly in the last quarter of 2008. However, the market did experience active business at year end. German investors dominated the market with a 43% share, the most active of which included Degi, SEB and GLL. Czech investors were also very active (24%), followed by UK companies (12%).

Prime yields moved out by 125 to 175 basis point over 2008 and currently stand at above 8% for industrial/logistics and under 7% for offices and retail. DTZ expects yields will continue to rise in 2009, with the sharpest increase being expected in logistics and light manufacturing halls as a result of stagnation in the industrial sector.

'We are aware of a significant volume of Czech equity assessing opportunities in domestic real estate. We expect their activity mainly in the second half of this year. We consider the opportunities for investors to be absolutely unique and unprecedented. As a consequence of market revival we expect a repeated decrease in yields in early 2010,' Kanters added.