Scarce supply of core property still
dominates development
03 / 2013
Real Estate
Commercial real estate
in Czech Republic –
Country
Facts
Real Estate Country Facts
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of the Austrian Media Act:
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Supervisory Board; Dr. Paolo Fiorentino, Deputy Chairman of
the Supervisory Board; Members of the Supervisory Board:
Alfredo Meocci, Dr. Alessandro Decio, MBA, MSc, Dipl.Ing.
Jean Pierre Mustier, Dr. Roberto Nicastro, Dr. Vittorio Ogliengo,
Franz Rauch, Karl Samstag, Dr. Wolfgang Sprißler, Dr. Ernst
Theimer. Delegated by the Employees’ Council: Wolfgang
Heinzl, Chairman of the Employees’ Council, Mag. Adolf
Lehner, First Deputy Chairman of the Employees’ Council;
Emmerich Perl, Second Deputy Chairman of the Employees’
Council; Dr. Barbara Wiedernig, Third Deputy Chairwoman of
the Employees’ Council; Members of the Employees’ Council:
Josef Reichl, Robert Traunwieser.
Management Board: Willibald Cernko, Chairman, Chief
Executive Officer (CEO); Gianni Franco Papa, Deputy Chairman
(CEE Banking); Members of the Management Board: Dr. Jürgen
Kullnigg (CRO Risk Management), Francesco Giordano, MSc
(CFO Finance), Mag. Helmut Bernkopf (Family & SME Banking),
Mag. Dieter Hengl (Corporate & Investment Banking), Mag. Doris
Tomanek (Human Resources Austria & CEE), Robert Zadrazil
(Private Banking).
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Editor: Bank Austria Real Estate Consulting & Investment, Karla Schestauber, Tel. +43 (0)50505-54784
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Dated: 22. February 2013
A joint publication of Bank Austria Real Estate, Immobilien Rating GmbH (IRG) and UniCredit Political Studies.
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2 I Real Estate Country Facts 03/2013
Risk appetite – the key word for future
developments in real estate markets
The past few months have seen progress
in easing the problems experienced in
the euro area. Sentiment in financial
markets and in the business sector has
improved and this should have a positive
effect on the real economy in the coming months. While political risks should
not be overlooked and setbacks may
occur time and again, we think that the
economy in the euro area will gradually
recover as the current year progresses. This means that the Czech
economy is also enjoying a brighter outlook as over 80% of the
country’s exports go to the European Union.
Real estate business in Europe picked up in the final months of
2012. According to CBRE, the transaction volume in Europe’s commercial property market rose to EUR 41.5 billion in the fourth quarter
of 2012, a level which was 48% higher than in the third quarter of
2012 and up by 16% on the fourth quarter of 2011. Demand still
focused on core assets, however, also with a preference for liquid
markets such as Germany, which are seen as safe. The transaction
volume in Central and Eastern Europe continued to concentrate on
Poland and Russia, while smaller core markets experienced a scarcity of supply. In 2012, investment in commercial property in the
Czech Republic fell sharply, by 71%, to EUR 609 million compared
with the previous year. While demand for core property remained
significant, supply was scarce.
Developments in 2013 will largely depend on how fast real estate
investors’ risk appetite will grow and whether such an increase will
be sustainable. We expect property markets in CEE to become more
attractive again, and that demand for core real estate as well as
value-added properties in attractive locations which offer significantly higher returns, is going to rise accordingly.
Real estate investors and developers are still relatively risk-averse.
Also a number of banks are acting with restraint when it comes to
granting new real estate loans in CEE countries. They all run the risk
of missing major anticyclical opportunities. We as UniCredit Bank
Austria are prepared to provide financing. In 2012, we recorded
new business totalling about EUR 1.5 billion. Our strategy for 2013
aims at maintaining or raising this level. UniCredit’s extensive CEE
network enables us to use our expertise in Austria and also draw on
the local know-how of UniCredit Bank Czech Republic, thus providing
our clients with wide-ranging support.
Yours sincerely,
Karla Schestauber
Real Estate Country Facts 03/2013 I 3
Real Estate Country Facts
Czech Republic – healthy fundamentals,
weak performance
The Czech economy ranked among the most developed countries
entering the EU in 2004. Its GDP per capita amounted to EUR
14,880 in 2011, which in PPS represented 80% of the EU average. This
put the country even ahead of some Western European economies
of the old EU block (Portugal, Greece). The country’s convergence
process gained momentum after the EU accession in May 2004. The
simplification of good shipments let to an increase in trade with the
EU. The proportion of exports to the block on total exported volume
rose to above 80% where it has held up to date. Germany has
remained by far the largest destination for Czech exporters, with its
share staying above 30% on the overall exports.
share of FX loans, focus on traditional banking activities etc. This all
contributed to the fact that the local banking sector did not require
any capital injection from the government and was able to stick to
solid profitability rates. Following a period of moderate recovery in
2010 – 11, the recession got back to the economy in 2012. Both
components of domestic demand – consumption and gross capital
– pulled GDP down, while net exports made the only positive contribution to growth, albeit with slowing dynamic. In 2013, the country
should move towards a gradual recovery in economic activity, supported by improving external demand and an upturn in the inventory cycle. Private consumption, however, is set to remain low.
In just four years to 2007, the export-to-GDP ratio jumped by 17
p.p. to 68% (80% in 2012), underscoring the country’s status of
one of the most open economies. This goes hand in hand with
another country’s feature: concentration of industry. The share of
industry in total value added at around 30% is one of the highest
in the EU.
A low inflationary environment is typical for the economy, with the
Czech National Bank’s (CNB’s) inflation target (currently at 2%) rarely
being overshot in the country’s history. The principal reason for the
elevated inflation since late 2011 has been the VAT rate hikes along
with regulatory price adjustments in the housing segment, i.e. factors
little relevant from the monetary policy viewpoint. We expect these
effects to continue keeping the CPI growth above the CNB’s target
in 2013 as well, although inflation should be roughly 1 p.p. lower
on average than in 2012.
The 2008 – 2009 crisis highlighted the vulnerability of the exportoriented Czech economy to external shocks. The robust real GDP
growth of 6.6% on average in 2005 – 2007 was followed by a
slowdown to 2.9% in 2008 and a contraction of 4.4% in 2009.
Although the impacts of the global crisis were noticeable in the
local economy, little harm was felt in the domestic financial sector.
It was a combination of a number of positive characteristics, unique
on a worldwide scale, what made Czech banks highly resistant:
excess of liquidity, high assets quality, strong capital base, low
After a two-year pause, the CNB restored the easing of monetary
policy by cutting interest rates in mid-2012. Last November, the key
two-week repo rate was cut to a technical zero of 0.05%, yet the
central bankers have signaled the need to loose monetary conditions
further. Weakening the CZK through market interventions has been
repeatedly mentioned to be the best solution. Up to now, it seems
Macroeconomic data and forecasts
2010
Nominal GDP (EUR bn)
Per capita GDP (EUR)
2011
2012e
2013f
2014f
150.1
156.1
153.0
155.2
166.1
14,274
14,874
14,553
14,742
15,755
Real GDP yoy (%)
2.3
1.9
–1.1
0.4
2.2
Inflation (CPI) yoy, avg (%)
1.5
1.9
3.3
2.3
2.1
Unemployment rate, avg (%)
7.0
6.7
6.8
7.3
7.0
Exchange rate EUR / CZK, avg
25.29
24.59
25.14
25.50
24.90
Current account / GDP (%)
–3.9
–2.8
–2.2
–0.5
0.0
FDI / GDP (%), net inflow
2.5
2.0
3.4
2.8
2.8
Budget balance / GDP (%)
–4.8
–3.3
–5.0
–3.4
–3.0
Public debt / GDP (%) (ESA 95)
37.8
40.8
45.5
47.5
48.4
Total external debt / GDP (%)
46.5
48.8
50.4
51.9
53.0
e … estimate; f … forecast
Sources: Czech National Bank, Czech Statistical Office, Unicredit Research
4 I Real Estate Country Facts 03/2013
EUR/CZK exchange rate
Contribution to real GDP growth
30
%-points
6
net exports
GDP
gross capital
consumption
29
4
28
2
27
26
0
25
–2
24
–4
23
–6
Source: Czech National Bank, Unicredit Research
CPI (yoy %)
Basic balance (CZKbn)
300
4
3
Ja
n.
1
2
r.
1
Ap
ly
Current account deficit
Net FDI inflow
Basic balance (% GDP) – RS
250
3
11
10
t.
0
9
08
r.
0
t.
Source: Czech Statistical Office, Unicredit Research
Ju
3Q12
Oc
1Q12
n.
1
3Q11
Ja
1Q11
Ap
3Q10
ly
1Q10
Ju
3Q09
Oc
1Q09
Ja
–8
n.
0
7
07
22
10
8
200
6
150
4
100
2
50
0
2
1
Source: Czech Statistical Office, Unicredit Research
that verbal interventions are sufficient to do the job. Given the
benign inflation and economic outlook for 2013, the switch to a
tightening bias is highly unlikely before 2014.
After years of solid gains, CZK has practically not been appreciating
against EUR since 2008 and the CNB’s foreign exchange policy
should not allow CZK to enter the firming path this year.
0
e
e
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
–2
20
v.
No
14
n.
Ja
3
.1
ar
M
12
M
ay
11
ly
Ju
10
p.
Se
09
v.
No
Ja
n.
09
–1
14
CNB CPI target
05
CPI
20
0
Source: Czech National Bank, Unicredit Research
The external stability of the economy has long remained firm, with
the current account deficit holding below 4.5% of GDP since 2005.
Moreover, the basic balance, which describes to what extent FDI
inflow is able to finance the deficit on the current account, has
lately shown visible signs of improvement.
Real Estate Country Facts 03/2013 I 5
Real Estate Country Facts
Short supply of core property
slows investment activity
Investors still concentrating on core assets
Commercial real estate investors were still looking primarily for
core property in 2012 (very good location, prime tenants with long
term rental agreements). Against the background of short supply,
the investment volume in the Czech Republic last year dropped to
609 million euros according to CBRE data, 71% below the 2011
level. However, the fact must not be overlooked that 2011 was an
exceptionally good year in which a whole series of very large transactions were concluded.
Czech Republic - Investment Volume in
Commercial Real Estate (in EUR m)
Office prime yields
4th quarter 2012
City
In %
Change from high in bp
Vienna
5.00
–75
Warsaw
6.25
–50
Prague
6.50
–50
Bratislava
7.25
–25
Budapest
7.50
–50
Bucharest
8.25
–125
8.50
–350
13.00
–200
Moscow
Kiev
Source: CBRE
3,000
2,500
Investment volume in the whole CEE area declined by a good 30%
last year, the Czech Republic’s proportion of this dropped significantly
to 0.5% from 1.8% in 2011. A gradual recovery of risk appetite
should however, improve the position of the Czech market again.
2,000
1,500
1,000
Market share in 2012
500
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: CBRE
CEE
Austria
Germany
Italy
Not only did the number of deals drop in 2012, the transaction volume also declined to an average of 30 million euros. Around half of
all transactions were concluded by Czech investors, while investors
from Germany, the USA, Austria, Greece and the United Kingdom
were also active. Offices dominated with a proportion of around
60% of the total volume, followed by retail and industrial real
estate. Prime yields at the end of 2012 were largely unchanged at
6.5% for offices, 6.25% for retail and 8% for industrial properties.
Tenants are increasingly looking for modern spaces with low operating
costs. The expected economic recovery is likely to be reflected in
increased new rental agreements from 2014 the latest, so we see
good chances for developers and investors. In light of the short supply
of core real estate, value-added investments (good location, but
with need for renovation) offer especially attractive chances.
6 I Real Estate Country Facts 03/2013
Czech Republic
Rest Europe
Source: CBRE
Czech Republic real estate
market regarded as transparent
The Czech Republic is classified as a transparent real estate market
by Jones Lang LaSalle. In the Transparency Index for 2012, the
Czech Republic ranked 24th, just behind Austria in 22nd place, making
it the second-highest ranking CEE country. Similar to Poland, the
Czech Republic scores especially well in the depth of market data.
The IPD (Investment Property Database) has also been presenting
rate risk should not be completely neglected, especially since the CNB
has stated that a weaker koruna would be desirable.
JLL Transparency Index 2012 Europa
EUR/CZK
Transpareny level
40
Source: Jones Lang LaSalle
The low country risk also speaks for the Czech Republic. The CDS
Spread development, which indicates a country’s probability of
default, classifies the country’s default risk as being only marginally
higher than that of Austria, while Poland’s risk, for example, is
somewhat higher.
5-year CDS spreads (in bp)
450
400
Czech Rep.
Austria
Poland
38
36
34
32
30
28
26
24
04.01.13
04.01.12
04.01.11
04.01.10
04.01.09
04.01.08
04.01.07
04.01.06
04.01.05
04.01.04
20
04.01.03
22
04.01.01
UK
Netherlands
France
Finland
Sweden
Switzerland
Germany
Denmark
Ireland
Spain
Belgium
Norway
Poland
Italy
Austria
Czech Republic
Hungary
Portugal
04.01.00
Transparent
2
4
7
8
9
10
12
14
15
16
17
18
19
20
22
24
26
28
Market
04.01.99
High
Rang
04.01.02
an annual performance indicator for the Czech Republic since 2010,
increasing transparency.
Source: DataStream
Czech Republic real estate market in the more
distant future
Many CEE countries (including SEE and CIS) are classified as developing
countries. Pramerica takes the approach that the potential of these
countries should not be measured in terms of population and GDP
growth, but rather by the size and output of the “consumer class”.
The consumer class is the segment of the population that has sufficient income and production power to use real estate of institutional
quality, such as shopping centres, offices, modern apartments and
hotels. Even though the Czech Republic already enjoys a high level of
development and the population as a whole is considered as being
the consumer class, high productivity growth will allow a relatively
substantial increase in per capita GDP, which will boost the demand
for commercial real estate in the long term.
GDP per capita of “Consumer Class”
in USD
2012
2022
300
Russia
25,276
37,403
250
Turkey
21,412
35,347
200
Slovakia
18,130
34,270
150
Czech Republic
18,770
34,080
100
Hungary
15,630
26,960
Poland
16,207
26,430
Romania
15,082
24,353
Ukraine
11,829
22,283
Bulgarien
18,446
21,816
350
50
01.10.08
01.12.08
01.02.09
01.04.09
01.06.09
01.08.09
01.10.09
01.12.09
01.02.10
01.04.10
01.06.10
01.08.10
01.10.10
01.12.10
01.02.11
01.04.11
01.06.11
01.08.11
01.10.11
01.12.11
01.02.12
01.04.12
01.06.12
01.08.12
01.10.12
01.12.12
01.02.13
0
Source: DataStream
Source: Pramerica
The Czech Republic remains outside the euro and is planning on
retaining the koruna (CZK) for the foreseeable future. This gives
somewhat greater flexibility in its monetary policy. The koruna has
remained relatively stable against the euro in recent years, fluctuating
in a corridor between 24 and 26 CZK/EUR. However, a certain exchange
Real Estate Country Facts 03/2013 I 7
Real Estate Country Facts
Czech office market – demand expected
to increase in 2014 at the latest
Supply of office space has slowed significantly
Prague, the capital city, is by far the most important office market
in the Czech Republic. The volume of office space has nearly tripled
from 2000 to 2009 as many speculative office buildings which
were started before the financial and economic crisis were still
delivered to the market. The situation only calmed significantly in
2010. 2011 and 2012 saw about 100,000 m2 of new space come
onto the market, far less than before the crisis.
Besides new buildings, renovated older buildings are becoming ever
more important as tenants demand modern spaces with lower
operating costs.
Office stock in 1,000 m2
600
500
400
300
200
100
an
y
a
Le
tn
op
k-
-E
ro
se
ce
-P
jvi
Vy
so
ca
ny
De
Sm
ich
ov
vr
-A
pa
nd
sk
el
v
to
ice
-O
ov
Ch
od
les
ov
ky
ul
od
St
e-
Ho
n
rli
Ka
vic
Bu
Office market development
in Prague 2000 – 2013(f)
to
Bu P
de an
jov kra
ick ca
Ze
nt
ru
m
0
3.5
Source: CBRE
Millions of m2
3.0
2.5
2.0
Office space scheduled for completion in
2013 or later (selection)
1.5
1.0
Office project
Total usable Year
of delivery
area (m2)
Status
City
Florentinum
49,000
2013
under
construction
Prague
Nová Karolina Park
25,000
2013
under
construction
Ostrava
Titanium (1. Phase)
20,000
2013
under
construction
Brno
Libeň Dock 01
9,000
2013
under
construction
Prague
AZ Tower
9,000
2013
under
construction
Brno
Na příkopě 14
7,000
2013
under
construction
Prague
BB Centrum/Gebäude G 5,500
2013
under
construction
Prague
River Gardens II
23,000
2014
under
construction
Prague
Jindřišská 16
6,000
2014
under
construction
Prague
Jungmannova 15
7,000
2014
under
construction
Prague
0.5
(f)
12
13
20
11
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
20
20
00
0.0
Source: IRG, CBRE
Some 80% of all office space is located in the nine office hubs, with
the largest volume of office space in Pankrac-Budejovicka (inner
city), followed by the central district and some way behind in Karlin.
Much smaller hubs are Butovice-Stodulky, Holesovice, Chodov-Opatov,
Smichov-Andel, Dejvice-Evropska and Vysocany-Prosek-Letnany.
This year, supply of new office space in Prague is again expected to be
in the order of 100,000 m2, some 50,000 m2 of which will be delivered
by the Florentinum development in the central district.
In Brno the Titanium development (phase 1) is also worthy of mentioning with 20,000 m2 as well as Nová Karolina Park with 25,000 m2.
Source: IRG
8 I Real Estate Country Facts 03/2013
Despite the recession in the Czech economy, the relatively low
development of new office space led to stabilization of the vacancy
rate at 11.5% last year. Compared to other European cities, Prague
is thus in the middle of the pack, on a similar level to Moscow or
Brussels.
Vacancy rates in Europe, 2012
25
Vacancy rates in %
20
15
10
5
Du
Bu bli
da n
pe
st
Bu Kie
ch v
ar
es
Am Mad t
st rid
er
da
m
Lis
M bon
os
co
Pr w
a
Br gue
St usse
oc ls
kh
Is olm
Co tan
pe bu
nh l
ag
e
Be n
rli
Ro n
W me
ar
sa
w
Os
Vi lo
en
na
Pa
r
Lo is
nd
on
0
Source: IRG
Prime rents in the central district have stabilised somewhat after
the decline in 2009. In 2012 they were running around 20 EUR/m2 /
month. Rents in Karlin, Pankrac and Smichov are lower, between
15 and 18 EUR/m2 /month.
Office space per inhabitant in 2012, in m2
Geneva
20.34
Copenhagen
20.02
Frankfurt
16.95
Zurich
15.76
Munich
15.16
Milan
8.93
Paris
7.61
Hamburg
7.42
Vienna
6.09
Bratislava
3.56
Prague
2.33
Warsaw
2.16
Budapest
1.82
Sofia
1.18
Tallinn
1.18
Bucharest
1.10
Moscow
1.04
Zagreb
0.81
Riga
0.80
Vilnius
0.71
Kiev
0.50
Belgrade
0.31
Istanbul
0.22
Source: IRG
Prime office rents Prague
In 2012, total leasing activity reached approximately 250,000 m2,
whereby new leases were around 150,000 m2 , below the longterm annual average of around 180,000 m2.
2007–2012 (eop)
EUR /m2 /month
25
Take-up in Prague
20
in m2
300,000
250,000
15
200,000
10
150,000
2007
2008
2009
2010
2011
2012
Source: IRG
100,000
50,000
Compared to other CEE cities, Prague is in second place behind
Bratislava when it comes to existing office space per inhabitant,
with 2.33. However, it is expected to be overtaken by Warsaw in the
near future. Compared to western capital cities, the rising per-capita
GDP is providing scope for new space in the medium to long term.
0
2005
2006
2007
2008
2009
2010
2011
2012
Source: BulwienGesa
We expect moderately positive economic growth of the Czech
economy in 2013. This will already help lease performance this
year. From 2014 onwards, the demand for office space should
continue to rise still further.
Real Estate Country Facts 03/2013 I 9
Real Estate Country Facts
Czech industrial market – a relative
success story
New rentals exceed production of new space
The logistics market was hit especially hard by the world wide crisis
after Lehman as the speed of reaction in this sector is particularly
high. A construction stop in logistics properties, which are often
built in phases/modules, is much easier than with a large office
building or shopping centres, where such decisions have substantially wider implications. For this reason, relatively little space has
come onto the market in recent years, with new rentals exceeding
new supply since 2010. This has caused the vacancy rate to drop
from a high of 18% in the crisis to its current rate of just under 7%
on a national average.
vacancy rate of around 13%. More than 40,000 m2 are currently
under construction. Finding tenants for this new space is not
expected to be a problem. The situation is far more challenging
for older spaces which no longer meet modern standards.
Vacancy rate logistics Prague, 2007 – 2012
in %
20
15
Czech industrial market
10
in m2
800
Take-up
New supply
700
600
5
0
500
2007
2008
2009
2010
2011
2012
Source: IRG
400
300
Stable rents
200
Prime rents have stabilised at just under 4 EUR/m2 /month in the
metropolitan area of Prague in recent years.
100
0
2006
2007
2008
2009
2010
2011
2012
Source: CBRE
Prime rents logistics Prague, 2007– 2012
At the end of 2012, there were a good 4 million m2 of industrial
stock in the Czech Republic. Some 200,000 m2 were completed last
year, with pre-leases exceeding 40%. Build-to-suit space is becoming
increasingly more important.
Demand for logistics space is driven largely by the automotive
component supply industry, making regional logistics hubs more
important. Attainable rents outside the metropolitan area of Prague
fluctuated 2012 in a corridor of 3.50 – 4.50 EUR/m2 /month.
Fewer vacancies in the metropolitan area of Prague
Some 40% of industrial stock is located in the metropolitan area
of Prague, whereby almost 60,000 m2 were added last year. New
rentals in 2012 were far higher at almost 190,000 m2. Accordingly,
the vacancy rate continued its downward trend. However, there
were tangible differences within the metropolitan area of Prague.
In Prague North/North-East and Prague South/South-East, the
vacancy rate was far lower than it was in the western districts, with a
10 I Real Estate Country Facts 03/2013
EUR / m2 / month
8
7
6
5
4
3
2
1
0
2007
2008
2009
2010
2011
2012
Source: IRG
Prime yields around 8%
Prime yields, which reached 9% during the crisis, have gradually
dropped and are currently about 8%.
Czech retail sector suffering from weak
consumer spending
Weak private consumer spending is having a negative effect on the
Czech retail sector. According to our forecast, consumer spending
will remain an impediment to growth again this year. A revival is
only expected in 2014.
Large volume of existing retail space
The Czech Republic is a saturated retail market with a quite high
volume of existing space. Despite this, new space is still coming to
the market, even though growth has slowed significantly. Measured
in terms off the absolute amount of stock available, the Czech retail
sector is concentrated heavily in Prague with around 900,000 m2
of shopping centre space. However, there is a different picture if the
number of inhabitants is also taken into account. While Prague boasts
around 700 m2 per 1000 inhabitants, Liberec has almost double the
relative space with around 1400 m2. Mladá Boleslav also boasts
a similar concentration. This disproportionate increase in space in
smaller towns and cities has already led to tough cut-throat
competition, a process which has not yet been concluded.
Purchasing power still below the EU average
Purchasing power in the Czech Republic remains below the EU average,
with consumers in Prague being able to afford around a quarter more
than the national average. In the medium to long term, the process of
convergence in the Czech economy will continue and the retail sector
will benefit from increasing purchasing power.
Puchasing power in EUR/capita, 2012
10,000
EU 27-average: 15.594 EUR/capita
9,000
Purchasing power in EUR/capita
Consumers remain cautious
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
e
c
vic
ějo
éB
ud
ec
ou
om
Ol
er
Lib
ň
ze
Pl
va
Os
tra
no
Br
ue
ec
Če
sk
Cz
2012
Source: MB Research
1,500
1,000,000
SC space in m²
SC space per 1,000 inh.
1,000
600,000
750
400,000
500
200,000
SC space per 1,000 inh.
1,250
800,000
SC space in m²
ag
h
re
pu
SC space in Czech cities
Pr
bl
ic
0
250
0
e
c
vic
dě
jo
Če
sk
é
Bu
ec
ou
om
Ol
er
Lib
ze
ň
Pl
va
Os
tra
no
Br
Pr
ag
0
Source: IRG, BulwienGesa
Some smaller cities are highly dependent on certain industries.
International economic upturns and downturns have therefore a
profound effect on the local labor market and can heighten the
regional predatory competition in the retail sector.
Prague has a high density of retail space compared
to other capital cities
Compared to other European capitals, Prague has a relatively high
density of overall retail space with almost 800 m2 per 1000 inhabitants.
That means the Czech capital has more space than, for example,
Vienna or Munich, where the inhabitants enjoy substantially more
purchasing power.
Slower expansion of space
Bratislava
Warsaw
Prague
Frankfurt/Main
Zagreb
Budapest
Vienna
Munich
Bucharest
Moscow
Sofia
Retail space in m2, 2012 per 1000 inhabitants
1,095
863
788
740
736
695
614
464
440
374
269
Source: IRG, CBRE, BulwienGesa
Real Estate Country Facts 03/2013 I 11
Real Estate Country Facts
Shopping centre
Cerný Most Shopping & Leisure
Center (2nd extension)
Centrum Krakov
Na příkopĕ 14/
Highstreet
Kaufhaus Diamant/
Highstreet
Copa Centrum Národní
Palác Stromovka
(Planned)
opening, status
2013, under construction
~ 14,000
~ 10,600
2013, under construction
2013, under construction
~ 6,000
2013, under construction
~ 12,000
~ 15,000
2014, under construction
2014/15,
under construction
Czech Republic still interesting for international
retailers
Despite weak domestic demand, below-EU-average purchasing power
and high market saturation, the Czech Republic remains interesting
for international retailers pursuing a medium- to long-term strategy.
According to CBRE, Hervis, Intersport, Deichmann, Takko Fashion and
several others have extension plans. However, there are also negative
examples, like Giga Sport and Flugger
which have abandoned the Czech market.
CBRE estimates the volume of older shopping center space –
meaning space that came onto the market before 2002 – at almost
one million m2. That means there is potential for renovations, while
new developments will only come to the market selectively.
Shopping centres Prague
20
LEGEND
25
12
1
31
28
35 27
38
24
37
29
39 30
26
7
23
8
25 33
Prague 201231
35 28
37
3930 27
26 38
2
36
16
m Stodůlky
Highstreet)
Gross lettable
area m
~ 39,800
As a rule, tenants still enjoy a good negotiating position for securing
special concessions such as the acceptance of relocation costs,
reduction or suspension of revenue-based rent, reduced service costs,
etc. Landlords prefer to make these concessions before they accept a
reduction in net rent.
Source: IRG, BulwienGesa, RegioPlan, Operator information
é strojírny)
c
Most
Most
centrum
ent Stores
laza
er Lužiny
ka
v
a Pořící
Národní
Depending on the location, performance and size of the shops, rents in
the shopping centers in Prague are in a range of eight and 80 EUR/m2 /
month. Top shopping streets in Prague, which are increasingly attracting
international luxury brands, demand 140 to 180 EUR/m2 /month.
Rent in the smaller cities is significantly lower.
Selected retail developments in Prague at
planning stage/ under construction
ov
n
g Park
oholy
hopping Center
e
m Eden
ař
Rents relatively stable
Despite the high degree of market saturation, new space is still coming
onto the market, although this growth has slowed significantly. In
Prague, the second expansion of the Cerny Most Shopping & Leisure
Centers alone represents an increase of almost 40,000 m2 this year.
17
4
5
22
Pra
18
14
32
15
9
13
19
3
a
Řepy
ek
21
m
treet)
,000 m²
0
State of
Created
on: SC
2/2013, Source: IRG, ESRI BulwienGesa, RegioPlan, developers‘ figures
Existing SC
Shopping Centres
SC under construction
Prague
12 I Real Estate Country Facts 03/2013
Planned SC
LEGEND
Shopping Centre
LEGEND
1 OC Letňany
Shopping Centre
2 Nový Smíchov
Shopping
Centre
13 OC
Letňany
Centrum
Chodov
LEGEND
2
Smíchov
14 Nový
OC
Letňany
Metropole
Zlicín
3
Centrum
ChodovPark
25 Nový
Avion Smíchov
Shopping
Shopping Centre
4
Zlicín
25
36 Metropole
Centrum
EuroparkChodov
Štěrboholy
12
5
Shopping
Park
47 Avion
Metropole
Zlicín
1 OC Letňany
Galerie
Harfa
Shopping
Center
20
6
Europark
Štěrboholy
58 Avion
Shopping
Park
2 Nový Smíchov
Rustonka
31
7
Shopping
Center
6 Galerie
Europark
Štěrboholy
3 Centrum Chodov
(former Harfa
Pražské
strojírny)
89 Galerie
Rustonka
7
Harfa Shopping Center
4 Metropole Zlicín
Arkády Pankrác
(former
Pražské
strojírny)
8
Rustonka
5 Avion Shopping Park
10 Centrum Černý Most
37
39 30
911 Arkády
(former
Pražské
strojírny)
6 Europark Štěrboholy
CentrumPankrác
Černý Most
28
10 Arkády
Centrum
Černý Most
Pankrác
26
7 Galerie Harfa Shopping Center 9
(2nd extension)
30
39
27
11
10
8 Rustonka
12 Centrum
PalladiumČerný Most35
30
39 26
(2nd
extension)
11
Černý Most 38
(former Pražské strojírny)
13 Centrum
Galerie
Butovice
11
16 26
12
Palladium
extension)
9 Arkády Pankrác 10
14 (2nd
Nákupní
centrum Eden
13
Galerie
12
10 Centrum Černý Most
15 Palladium
OC ParkButovice
Hostivař
30
16
39
14
Nákupní
centrum Eden
13
Butovice
11 Centrum Černý Most
16 Galerie
OC Šestka
16
15
OC
Park centrum
Hostivař
26
14
Nákupní
Eden
(2nd extension)
17 Nákupní
centrum
Stodůlky
16
Šestka
15
Park
Hostivař
12 Palladium
18 OC
Palác
Flóra
17
Nákupní
centrum
Stodůlky
16
OC
Šestka
13 Galerie Butovice
19 DBK Obchodní centrum
16 Department
18
Palác
17
centrum Stodůlky
14 Nákupní centrum Eden
20 Nákupní
Kotva Flóra
Stores
19
Obchodní
centrum
18
Palác
Flóra Plaza
15 OC Park Hostivař
21 DBK
Novodvorská
20
Department
Stores
19
DBK
Obchodní
centrum
16 OC Šestka
22 Kotva
Shopping
Center
Lužiny
32
21
PlazaStores
20
Kotva
17 Nákupní centrum Stodůlky
23 Novodvorská
Palác Department
Stromovka
22
Center
Lužiny
32
21
Novodvorská
Plaza
18 Palác Flóra
24 Shopping
Centrum Krakov
23
Stromovka
22
Shopping
Center
Lužiny
32
19 DBK Obchodní centrum
25 Palác
Bílá Labuť
- Na Pořící
4
24
KrakovNárodní
23
Palác
Stromovka
620 Kotva Department Stores
26 Centrum
Copa Centrum
5
25
Bílá
Labuť
- Na Pořící
24
Krakov
21 Novodvorská Plaza
4
27 Centrum
Černá
růže
26
Copa
Centrum
Národní
5
25
Labuť
-32
Na(Highstreet)
Pořící
22 Shopping Center Lužiny
28 Bílá
Na příkopĕ
14
4
27
Černá
růže
26
Centrum
5
23 Palác Stromovka
29 Copa
Galerie
Fénix Národní
28
Na
27
růže 14 (Highstreet)
24 Centrum Krakov
30 Černá
My příkopĕ
Národní
29
Galerie
Fénix
28
Na
příkopĕ
14 (Highstreet)
25 Bílá Labuť - Na Pořící
17
31 4
Millenium
Plaza
30
My
Národní
29
26 Copa Centrum Národní
5Fénix
32 Galerie
Shopping
point Řepy
13
31
Millenium
Plaza
30
Národní
27 Černá růže
33 My
Passage
Myslbek
32
Shopping
point Řepy 22
31
Plaza
28 Na příkopĕ 14 (Highstreet)
34 Millenium
OC Spektrum
33
Passage
Myslbek
32
point Řepy
29 Galerie Fénix
35 Shopping
Palác Koruna
34
OC
33
Myslbek
30 My Národní
36 Passage
ZlatýSpektrum
Anděl
35
Palác
Koruna
34
Spektrum
31 Millenium Plaza
37 OC
Slovanský
Dům
36
Zlatý
Anděl
35
Koruna
32 Shopping point Řepy
38 Palác
Diamant
(Highstreet)
37
Slovanský
Dům
36
33 Passage Myslbek
39 Zlatý
PalácAnděl
Metro
38
(Highstreet)
37 Diamant
Slovanský
Dům
34 OC Spektrum
39
Metro
38 Palác
Diamant
(Highstreet)
35 Palác Koruna
39
Palác
Metro
GLA in m²
36 Zlatý Anděl
state of SC
37 Slovanský Dům
GLA in> m²
50,000 m²
Existing S
38 Diamant (Highstreet)
state of SC
GLA in m²
39 Palác Metro
state of Existing
SC
50,000 m²
>20,001
50,000– m²
S
SC Under
>< 50,000
m²
Existing S
20,000
m²
20,001
– 50,000
m²
SC
UnderS
Planned
GLA in m²
20,001
m²
SC Under
state <
of20,000
SC – 50,000
34
m²
Planned S
> 50,000 m²
< 20,000
m²SC
Existing
Planned S
2,5
5
Kilometer
20,001 – 50,000
m²
SC Under Construction
1,25
±
< Created
20,000 m²on: 2/2013
Sources: IRG, ESRI,
BulwienGesa,
RegioPlan,
developers' figures
Planned SC
Contacts:
Bank Austria
UniCredit Bank Czech Republic
Real Estate
Anton Höller
Tel: + 43 (0)50505-55980
anton.hoeller@unicreditgroup.at
Real Estate
Tomas Prochazka
Tel: + 42 (0)95596-1306
tomas.prochazka2@unicreditgroup.cz
Günter Hofbauer
Tel: + 43 (0)50505-57488
guenter.hofbauer@unicreditgroup.at
Real Estate CEE
Lukasz Motyl
Tel: + 43 (0)50505-55142
lukasz.motyl@unicreditgroup.at
Research and Valuation:
Bank Austria
UniCredit Bank Czech Republic
Real Estate Research
Karla Schestauber
Tel: + 43 (0)50505-54784
karla.schestauber@unicreditgroup.at
Economic Research
Patrik.Rozumbersky
Tel: + 42 (0)95596-0718
patrik.rozumbersky@unicreditgroup.cz
Valuation
David Dusek
Tel: + 42 (0)95596-1953
david.dusek@unicreditgroup.cz
Real Estate Country Facts 03/2013 I 13