The new episode of our video overview highlights trends in the Czech real estate market. These are the key insights:
- Prague Office Market: The Prague office market remains dynamic, with quality being a key driver for achieving premium rents, which can exceed €30 per square meter per month. However, the future of older office buildings that fail to meet modern tenant demands is uncertain. Many of these buildings will require significant investment to adapt, or they may need to shift focus to attract different types of tenants. Despite growing demand for prime office spaces, rental growth is expected to moderate this year. This is in the context of a record-low completion of new offices—only about 25,000 square meters—compared to pre-Covid years, when annual completions exceeded 150,000 square meters. Fortunately, vacancy rates are not expected to rise.
- Prague Hotel Market: Prague hotels are experiencing one of the strongest performance growths in Europe. The average revenue per available room (RevPAR) increased by 11% in the first three quarters of 2024, while the average daily rate (ADR) rose by 5%, reaching €113 by the end of the year. The supply of new hotels remains limited, except for the luxury segment, which is set to add 320 rooms by the end of 2025. Demand in 2025 is forecasted to exceed 2019 levels by more than 16%, fueled by a recovery in tourism, improved air connectivity, an increase in visitors from Asia, and growing corporate demand.
- Industrial and Industrial Properties: The Czech industrial market remains robust, although leasing activity has slightly weakened due to slower economic growth. The redirection of supply chains continues to support strong interest in the market. Rents in quality industrial properties are expected to stay stable in 2025, driven by strong demand and limited warehouse availability. While the volume of new industrial space in 2024 did not reach the record levels of previous years, developers are bringing new projects to the market that focus on sustainability goals to meet growing demand.
- Czech Retail Market: Consumer confidence has been on a slow recovery path since hitting its lowest point at the end of 2022. Discount chains continue to benefit the most from this trend, but a gradual recovery in the mid-market segment is also expected. The resurgence of tourism is driving growth in premium and luxury categories, where consumers are less affected by rising prices. As a result, we anticipate a slight increase in rents on major shopping streets and in shopping centers. For instance, on Pařížská Street, the highest rent is now approximately €225 per square meter per month. New retail construction remains dominated by retail parks, particularly in smaller towns, although the market is approaching saturation.
- Real Estate Investment: Transaction volumes are showing clear signs of stabilization, with no sharp price declines or significant interest rate fluctuations expected. In 2024, investments surpassed €1.5 billion, exceeding the totals from the previous two years. Investors are increasingly favoring operational properties, such as residential assets, over cyclical assets like offices. This trend is expected to strengthen further in 2025. While yields on prime properties are likely to remain stable, secondary assets may continue to see rising yields.
Watch our video overview for more insights:
