Czech commercial market grinds to a halt

The Czech Republic's commercial property investment market has all but ground to halt with just four transactions completed in the first half of 2009, according to a new report.

Half year investment volumes in the central European country fell an astonishing 87% to transactions worth just €73.1 million compared with the second half of 2008, says the report from real estate consultants CB Richard Ellis.

At its peak in the first half of 2007 Czech investment volumes were about €1.5 billion and a further €1.1 billion of transactions followed in the second half of 2007.

'The commercial real estate investment market in the Czech Republic is currently experiencing an extremely low level of activity as a result of the world economic downturn,' said Stuart Bloomfield, head of capital markets at CBRE's Czech unit.

'In many cases there continues to be a discrepancy in the expected pricing levels of vendors and potential investors,' he added and said there was now stalemate in the once-buoyant market.

Bloomfield said the market was waiting for the establishment of a new benchmark yield for institutional grade investment property in the retail, office and industrial sectors.

However, even those buyers willing to pay current prices were having problems sourcing debt from nervous lenders.

'Financing remains difficult to obtain as banks are extremely cautious, have lower allocations for real estate financing and require higher levels of equity participation,' Bloomfield said.

UK property group Segro has stopped all developments in the Czech Republic. It is just one of several high profile companies that are slowing down their presence in central European countries.

BOOKMARK THIS PAGE (What is this?)