Czech investment on the domestic real estate market was nearly five times that of international investment as of early December, totaling €383 million compared to €83 million invested from abroad. The ratio of transactions closed also favored domestic buyers coming in at 16 to 9.
It is the second year in a row where Czech and Slovak buyers have dominated the market, according to analysis by property consultants King Sturge. A number of factors have contributed to this recent trend, including lack of liquidity and legislative uncertainty among German funds, previously major players on the market here.
Czech investors are also coming back to real estate after having been burned on the stock market, and are putting their more in-depth knowledge of their home market to use. ‘Gold is too expensive; the stock market is unstable’
“I think people believe in the real estate market,” said Serge Borenstein, founder of the Karlín Real Estate Group. “Where do you want to put money now? Gold is too expensive; the stock market is unstable. Prague, unlike other cities in Western Europe is not overdeveloped and the prices are good. … The ones who are buying now know what they’re doing.”
According to information obtained by Czech Position, some real estate investors, among whom are some well-known players, sold off parts of their portfolios at the beginning of the financial crisis out of fear of a steep decline in prices. With investment bankers advising them that shares had already reached bottom they opted to put that money into the stock market, where its value dropped much more sharply.
Czech Property Investments Group (CPI Group) led domestic investors with over €220 million in acquisitions, while most other domestic investments tended to be in the smaller €10 million–€15 million range.
Next year could well see the return of international investors to their formerly leading role. The first quarter of 2011 should see the closing of CA Immo’s acquisition of Europolis for €272 million, including the Czech portion of its portfolio, and potentially could also see Germany’s GLL Real Estate acquire Karlín Group’s Keystone building for Kč 550 million.
Kateřina Menzelová contributed to this report
