Czech Republic Real Estate Report Q3 2011
Includes 3 FREE quarterly updates
BMI retains its view that the Czech Republic real estate sector remains among the best positioned in Central and Eastern Europe to benefit from any further growth in ‘core’ countries in Western Europe (eg Germany, France and the Benelux countries). With foreign investment strengthening after the effects of the global economic downturn, we forecast promising economic growth for 2011 after minimal performance in 2010.
Still, it might be premature to refer to current conditions as a boom. When we spoke to them at the end of 2010, our in-country sources explained that rents and capital values had stabilised after a difficult period in 2009. Nevertheless, they were looking for yields to remain broadly constant through 2011 and 2012 – implying that rents and capital values were likely to move upwards, if gently, in tandem. Writing in mid- 2011, our impression is that this expectation was reasonable. Our sources anticipated increased demand for office property in downtown Prague, as well as for shopping space nearby.
Other challenges persist. Some protagonists have not been able to access the funds that they need – and/or have become over-extended as a result of deal-making in foreign markets. In May 2011, for instance, ECM Real Estate Investments’ stock was suspended following its bankruptcy. Looking forward, we would see volatility in European financial markets as the main challenge to the construction companies and (in particular) developers in the Czech Republic. For the time being, though, we remain reasonably optimistic.
BMI retains its view that the Czech Republic real estate sector remains among the best positioned in Central and Eastern Europe to benefit from any further growth in ‘core’ countries in Western Europe (eg Germany, France and the Benelux countries). With foreign investment strengthening after the effects of the global economic downturn, we forecast promising economic growth for 2011 after minimal performance in 2010.
Still, it might be premature to refer to current conditions as a boom. When we spoke to them at the end of 2010, our in-country sources explained that rents and capital values had stabilised after a difficult period in 2009. Nevertheless, they were looking for yields to remain broadly constant through 2011 and 2012 – implying that rents and capital values were likely to move upwards, if gently, in tandem. Writing in mid- 2011, our impression is that this expectation was reasonable. Our sources anticipated increased demand for office property in downtown Prague, as well as for shopping space nearby.
Other challenges persist. Some protagonists have not been able to access the funds that they need – and/or have become over-extended as a result of deal-making in foreign markets. In May 2011, for instance, ECM Real Estate Investments’ stock was suspended following its bankruptcy. Looking forward, we would see volatility in European financial markets as the main challenge to the construction companies and (in particular) developers in the Czech Republic. For the time being, though, we remain reasonably optimistic.
Contents
Executive SummarySWOT Analysis
Czech Republic Real Estate/ Construction SWOT
Czech Republic Economic SWOT
Czech Republic Business Environment SWOT
Real Estate Market Overview
Table: Czech Republic’s Real Estate Market – Historic Rents, 2009 And 2010 (m2/month, EUR)
Table: Czech Republic’s Real Estate Market – Net Yield, 2010 And 2011 (%)
Table: Czech Republic Real Estate Markets – Terms Of Rental Contract/Lease, Mid-2010
Table: Czech Republic’s Real Estate Market – Available And Vacant Space, Mid 2010 (m2, unless stated)
Industry Forecast Scenario
Table: Czech Republic’s Real Estate Market – Rentals, 2010-2012 (m²/month, EUR)
Table: Czech Republic’s Real Estate Market – Forecast Yield, 2008-2015 (%)
Construction Industry Outlook
Table: Czech Republic Construction And Infrastructure Industry Data, 2007-2015
Table: Czech Republic Construction And Infrastructure Industry Data, 2012-2020
Macroeconomic Outlook
Table: Czech Republic – Economic Activity, 2008-2015
Business Environment
Real Estate/Construction Business Environment Rating
Table: Europe Real Estate/Construction Business Environment Rating
Czech Republic’s RECBER
Czech Republic’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Emerging Europe, Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations, 2000-2008 (US$mn)
Competitive Landscape
Company Monitor
Central Group
ECM Real Estate Investments AG
Finep
Orco Property Group
Passerinvest
Sekyra Group
Skanska CZ
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
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