Geopolitical and economic challenges are not leaving the commercial real estate market unaffected. But how will these major global changes impact the Czech investment market in 2022? This is the question an expert panel, moderated by Mark Richardson (Colliers), at Prague Property Forum 2022 tried to answer.
We are seeing structural changes in the market now. They are influenced by inflation that will be persistent over the coming period and by the gas crisis that is most likely to be unfolding in the second half of this year, described the situation Tomáš Jandík (REICO). He highlighted that those investors that continue to hold their assets will be able to benefit from rising rents as the market deals with inflation.
Josef Eim (Českomoravská Nemovitostní) agreed with this cautious position and explained that he’s also waiting for better opportunities to arise. What ČMN acquired in the past years is now profitable, therefore the company is not forced to invest at the moment, he said, adding that they have capital waiting to be deployed but they don’t see any interesting investment opportunities in the domestic market right now.
Dieter Knittel (pbb Deutsche Pfandbriefbank) emphasised the strong and positive role local investors play in the Czech market, adding that he expects to see a steady and stable transaction volume in the Czech Republic and also in Hungary during the rest of the year. In Poland, however, he expects to see fewer transactions completed in Q2-Q3 2022.
As construction and financing costs have increased over the past two years, developer margins have been falling. In response to this, according to Pavel Streblov (Penta Real Estate), there are developers that now insert inflation clauses into their contracts. The expert said that this might become more common in the future in an effort to spread the risk of cost increases between builders, developers and consumers.
Another thing that influences the investment market is ESG and how the buildings meet these standards, mentioned Hannes Wimmer (Erste Group Bank AG). Many international tenants look for buildings that are following ESG standards because they also have their own ESG goals to comply with. Andreas Kozma (iREMS International) reaffirmed this statement, adding that ESG is necessary for all parties, the owners, tenants, and the builders.
