Czech investment and development company Passerinvest Group is raising asking rents across all its office buildings at Brumlovka and Nové Roztyly in Prague, including projects under preparation. The company is introducing a uniform increase of €1 per sqm per month in response to a shift in the interest rate environment.
The European Central Bank has raised its key interest rates repeatedly this year, while Passerinvest's financial model had originally been based on assumptions of a gradual decline. For newly planned projects, the changed rate environment affects their economics immediately, while existing buildings are affected gradually, primarily as loans come up for refinancing.
"As a long-term owner, we cannot look at the economics of our buildings only through the lens of the present day. Our goal is to adjust project economics on an ongoing basis so that we do not have to react with sudden rent increases in the future. That is why we have decided on a partial increase of one euro per sqm per month. We are not passing on the full impact of the changed financial environment," said Eduard Forejt, director of development and business at Passerinvest Group. He added: "If we want to continue building and operating buildings, project economics must remain stable and resilient over the long term. Fortunately, our model allows us to view development, ownership, operations and financing as a single whole and to react in time when needed."
Forejt also noted broader market implications. "Higher financing costs represent a significant factor for the entire real estate market. In general, they can substantially affect the economics of planned projects and in some cases lead to delays or reassessment of construction. In a situation where the availability of new office space remains limited and a significant share of space under construction is already pre-let, a deterioration in the economics of new projects could deepen the shortage of genuinely available new space," he said.
Passerinvest Group was founded by Radim Passer in 1991 and has since been associated primarily with the Brumlovka district in Prague 4. The company is also developing the Nové Roztyly area, which includes the completed Roztyly Plaza office building and the planned Sequoia office building, part of a broader transformation of the area into a mixed-use urban district.
