The investment panel at Prague Property Forum 2023 focused on investment opportunities and financing. While banks emphasized that they are ready to lend money, perhaps more cautiously, investors talked more about waiting for the right moment when investment opportunities appear. The great potential of the Czech market is mainly in the local money and local investors, which gives the market stability, participants agreed.
The Czech real estate market is currently experiencing great uncertainty, partly because of high inflation, said bankers at the beginning of the Prague Property Forum 2023 discussion on investment strategies. "However, this does not mean, that we as banks have stopped lending money. We will certainly continue to finance, and we want to do it in the nearest future too. But this is about a strong relationship. We will finance only those entities that we know and have financed before. It will also be only with conservative parameters of 50 or 55% LTV," said Lenka Kostrounová, Director of Real Estate Finance at ČSOB, adding that even in the bad times and crises the bank's portfolio has to be diversified.
Conditions in the real estate market in the Czech Republic are not easy now, but according to the investors in the debate, it has hidden potential. "As the market is more complicated now, one has to be even more clever and try to find hidden opportunities. The current situation will force those that have not been able to move their thinking forward to address the efficiency of their portfolios," notes Jaroslav Kaizr, Expert Director of the MBARE programme. Such opportunities might be, according to him, older office properties that will become empty over time, and this will be the opportunity for someone to improve them.
Pavel Streblov MRICS, Business Director CRE and Penta Real Estate added that "the pressure on ESG that is now weighing on companies will lead to the fact that multinational tenants will no longer be able to stay in old buildings because they will not meet the ESG parameters. So, there is some room for new development. But you must be careful about the location and the product.” He also added that a good location and a product will always find their client. So, it is possible, according to him, that some of the older buildings outside the centre will no longer retain that office function and will have to change their use.
Tomáš Jandík CEO of REICO is also one of those who are rather waiting in these times. According to him, there are opportunities where there is a reasonable price and a reasonable buyer. Nevertheless, he said that: "We are not currently planning to complete any acquisitions this year and we will probably not start analysing the market until later in the year. So, acquisitions are not currently a priority for us. The priority is asset management, cautious liquidity operations that means refinancing and selected sales."
No matter what the situation is, Josef Eim, Vice-Chairman of the Board of Českomoravská Nemovitostní, declared that lending, investing, and developing will continue. "Banks are also not happy at all if they cannot lend and are therefore looking for opportunities among other players in the chain. We all need each other in this real estate market. A developer needs an investor to buy their building. The investor needs the bank, and the bank needs the developer to build because if the bank doesn't finance and lend, it simply doesn't make money," commented Eim. But even his company is now in a wait-and-see mode. "Our strategy now is to wait. We are waiting and sitting on cash and waiting to see who the first brave investor will be."
The key to the Czech real estate market is mainly local investors. “I think local money is the key! You have it here and that gives stability to the market now because they don't want to move somewhere else. They want to stay here,” concluded Dieter Knittel Head of CE at pbb Deutsche Pfandbriefbank.
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