News Article Colliers coronavirus Czech Republic interview SEE
by Ákos Budai | Interview

Many market players, especially those working in industrial and office, expect a swift return to business as usual in the third quarter. Andy Thompson, Director of Czech & Slovak Capital Markets and Tewfik Sabongui, Managing Partner for the Czech Republic shared Colliers International’s expectations for the coming months.


Andy Thompson

Andy Thompson

Head of Investment Czech Republic & Slovakia
Colliers International

Andy joined Colliers International in 2015 as Director and Head of Investment Services and has been the firm to establish itself as the leading investment consultancy business in the Czech & Slovak Republics. Andy graduated from the University of Aberdeen with a Masters Degree in Land Economy and is a member of RICS. Andy's scope of responsibilities includes the structuring and execution of property asset sales and acquisitions, both buy & sell-side commercial due diligence and advisory, commercial negotiations of sales and purchase contracts and supplementary transactional documentation as well as transaction co-ordination. Andy differentiates his services through exceptional client care and attention to detail ensuring the best terms for his clients. More »

What is your projection for 2020 on the CEE investment market? When do you expect the market to bounce back?

Q3 looks likely to be the most affected quarter this year as many deals already advanced from last year and Q1 continue to progress. Many participants believe that the markets will come back quite fast with sales/marketing activity returning in Q3 particularly in industrial and likely office. There appears to be plenty of equity still looking for opportunities (and in addition to the current expected opportunities, there are likely to be more resulting from the economic impact of the virus).

How will ongoing investment transactions be affected by the coronavirus outbreak?

Some deadlines will be extended – for bids and due diligence/signing. Some products that would have been launched in Q1/Q2 are expected to be launched in Q3. We expect that off-market transactions will have a greater significance too.

Hotels and retail will be more of a struggle (than industrial and office) until the market is able to assess the strength of the rebound and consumer spend/tourism and until its clear which occupiers will even survive, so this is expected to take a little longer – into 2021 - unless the assets are distressed.

One of the challenges is expected to be financing for new transactions and it will be important that the banks continue to provide liquidity in the market. That said, we also see some opportunities in this sector as new (relatively cheap) global financing sources become more prominent and are ready to take the place of the banks in some instances.

China may prove to be a useful yardstick. Our colleagues there have informed us that they are already 100% back to action in the main cities of Shanghai and Beijing and they are moving quickly in that direction in the worst affected areas of the country.

What are the reactions you’re hearing from your clients? How are investors reacting to the situation?

Logistics has been the darling sector for the last couple of years and I expect this to continue – with both seeing more growth in the short-medium term, driven by e-commerce and consumer delivery. Longer lease terms and covenant strength will both assume greater importance and this will also drive investment in the manufacturing sector.

Depending on the sector, many clients expect this to be business as usual quite quickly – and many that we speak to are continuing to assess and look at opportunities. Some clients have expressed a hope/expectation that there may be one or two more opportunities available in the market by the end of the year, although not necessarily at any discount. Others believe that whilst they expect the market to come back in 12 months, the interim period for leasing/pre-leasing may be slightly longer than expected and so this would have an impact on pricing.

What about landlords?

Landlords who already hold assets and have short-term challenges with tenants not able to occupy the space are relying heavily on local managing agents to leverage their tenant and supplier relationships to mitigate these hopefully short-term challenges. Its times like this that property management and project management teams are worth their weight in gold. Especially those that can lever off global networks to explain to landlords, occupiers and banks what was successful in other jurisdictions.   

Tewfik Sabongui

Tewfik Sabongui

Managing Partner Czech Republic
Colliers International

In real estate and in the Czech Republic, Tewfik started his career in 1999, out of which he spent 16 years with Jones Lang LaSalle. During these 16 years with JLL, Tewfik was a key CEE leader and instrumental to the growth of JLL’s business in the Czech Republic. Tewfik was heading various departments and business lines between 2003 and 2010, such as Office Agency, Industrial, Retail and Residential. From 2007 till January 2017 Tewfik was the Managing Director of JLL in Czech and in 2011 he became one of three key CEE Board Members overseeing seven countries in the CEE/SEE region and aiming at setting up strategies and connecting the region’s platform and clients. In September 2017 Tewfik set up his own Consultancy firm "THREESIXTY" with his partners, which 11 months later it merged with Colliers International and Tewfik became a Managing Partner at Colliers International Czech Republic.  More »

How has the coronavirus outbreak affected the way you and your colleagues work?

The outbreak of COVID-19 has driven us to instantly restructure the way we work and we were among the first companies in the Czech Republic and in the real estate sector that offered employees to be able to work from home or remotely. The concept of allowing people to work from home was already part of our setup, but until the outbreak, it was rather the exception than the rule. We have allowed everyone to work from home before the government imposed stricter regulations. Our advantage was that we were well prepared and equipped on the IT front to manage an instant move and change of working habits. This crisis became actually a real-time test to see how we will manage and so far I see great success and cooperation between all our people and teams, not only locally but across the CEE region and EMEA.

Do you think that this major trial of remote working will fundamentally change the way companies operate in the long run? Will this be reflected in their office space needs?

No doubt this situation and experience will certainly force many companies to rethink the way they will operate in the future. Those who were not fully prepared for a proper longer-term home office platform will make this a priority and many companies will reconsider the actual space and size requirements they really need. If they can reduce the total space but still manage to keep the productivity high, this will be certainly looked upon. Office spaces will continue to transform from being purely a physical space and destination where people come to work to sit behind desks, to a venue where people come, meet, socialize and produce whilst wellbeing, efficiency and productivity can be achieved. I don’t see this going to the opposite limit where the majority of people will mainly or only work from home, due to the fact that people need to socialize, have personal meetings and be in regular contact. I also think that it is too early to jump to conclusions about how well the home office is being implemented as it’s only been a few weeks since it began. This will show better in the next few weeks or months, where I expect most people will actually want to go back to work to the office from their homes.

Do you expect the current crisis to accelerate the adaptation of technology in general?

Absolutely, IT is the backbone that allows all this remote and home office networking to function. I expect more technological development to take place in the different social media applications, video conference calling apps, ordering and delivery apps, clouds and shared drives, etc. Also, companies will take some serious steps to upgrade their IT systems and better educate their employees on how to manage different applications and platforms.