GDP growth forecast for Czech Republic was revised downwards to 2.4% for 2019 due to a lower investment activity, which was lower in Q1 2019 than previously reported.
Office
The office occupational market has been continuously growing each quarter by about 5% y/y and the office pipeline is strong for the next three years, too. The share of the pre-leased new space amounted to over 85% in the last quarter, which demonstrates further market growth potential. Both on supply and demand side, Prague 4 and Prague 8 remain traditionally the most attractive districts.
Several major office investment transactions were closed at the beginning of 2019. While they still holding more than 50% of the market, local investors are slowly losing market share to their foreign counterparts as international investors recognize the wealth of options.
Retail
Retail sales grew by 4.9% in 2018, exceeding Eurozone average, but also more than 11% of the total sales came from e-commerce retailers.
About 30 new brands entered the Czech retail market in 2018, particularly from clothing and F&B sectors. Czech Republic remains the largest retail park market in Central and Eastern Europe. 13 new retail parks totalling 52,000 sq m were completed in 2018, compared to 18 opened projects with the total area of 47,000 sq m in the previous year.
Liquidity of the retail market is limited for prime assets due to a negative sentiment in the Western Europe. While the high street and shopping centre markets are currently in limbo, market activity grows within lot sizes accessible for local capital as well as in retail parks.
Industrial
Total industrial stock exceeded 8 million sq m in the Czech Republic at the end of Q2 2019, with over a third of total stock in Greater Prague region. The highest amount of new supply in the first half of the year was delivered in Moravia-Silesia region, which remains the fastest growing region in the country. In total, 314,000 sq m of industrial stock were completed in H1 2019.
Czech industrial market remains incredibly attractive for investors looking for the benefits of long leases, reasonable lot sizes and high liquidity, but it has been facing a general lack of product.
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