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Our latest report, "Czech Republic Outlook H2 2025," provides key insights and trends to help you understand the market.
Investment Market
The Czech investment market began recovering in late 2024, with momentum expected to continue throughout 2025. Total investment volume is projected to reach approximately €3.6 billion, double the average for 2020–2025 (excluding hotel transactions). Investors remain focused on high-quality assets, particularly in retail, office, and logistics. Prime yields have stabilized across most sectors, with slight compression anticipated in the office segment due to limited supply and sustained demand for premium properties.
Prague Office Market
Leasing activity in Prague has slowed, with tenants prioritizing high-quality space in the wider city center, which accounts for 87% of total activity. Decision-making processes have lengthened amid economic uncertainty, while demand for ready-to-occupy offices has increased to avoid high fit-out costs. Vacancy rates vary significantly between central and non-central locations, but are expected to decline further, especially in well-positioned buildings. Limited new supply and strong demand are putting upward pressure on prime rents.
Industrial Market
Industrial leasing activity softened in Q2 2025 but is stabilizing near pre-pandemic levels. The most sought-after regions include Greater Prague, South Moravia, and Ústí nad Labem. New supply has declined over the past two years, leading to ongoing market constraints. Developers remain cautious, with some projects stalled at the shell & core stage pending pre-leasing. Prime rents are expected to remain stable through year-end, though effective rents may decrease in high-vacancy areas due to increased landlord incentives.
Retail Market
Czech consumer confidence improved in July 2025, supported by easing economic concerns and stable household sentiment. Retail parks continue to lead new development, while shopping centres focus on refurbishments and enhancing the tenant mix with more experience-driven concepts. Pařížská Street in Prague is strengthening its role as a key luxury shopping destination in Central Europe, with several new premium brands entering the market. Prime retail rents are forecast to rise moderately across all segments by year-end.
Hotel Market
Prague’s hotel market showed consistent performance growth in H1 2025, with RevPAR reaching €82—up 4.7% year-on-year and 25.5% above 2019 levels. The luxury segment expanded by 25% in H1 2025, though it still represents only 3% of total inventory. Overall supply growth remains constrained, with a projected increase of just 1.8% by year-end. Total demand for paid accommodation is expected to exceed 2024 levels by over 14.5%, driven by a 15.5% rise in international visitors and improved air connectivity.
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SECTOR-SPECIFIC REPORTS
Economy & CRE Investment
The economy has seen stagnant growth and diminishing inflation, with Central Banks intensifying rate hikes. Inflation is on the expected path, encouraging Central Banks to continue their policies until at least H2 2024. Property values are projected to inflect in Q3 2024, coinciding with economic recovery and interest rate cuts.
Office
The European office market is adapting to hybrid work models, with a surge in flexible spaces and 'option space' in leases. Demand for Grade A office space remains strong, with a focus on quality and sustainability. Investment is shifting towards value-add opportunities in the office sector, especially in high-quality offices with strong ESG credentials.
Logistics
Logistics occupier activity has slowed down, aligning with pre-pandemic levels. Vacancy rates are rising due to increased supply, and developers are becoming more cautious. Investment activity is expected to recover as pricing stabilises, with different capital strategies emerging.
Retail
The retail sector faces challenges from inflation, interest rate hikes, and low consumer confidence. Despite stagnant trade volumes, there's a growing demand for immersive retail experiences. Retail asset pricing is shifting towards value-add strategies, focusing on sustainability and community engagement.
Living
The living sector, including senior living and student accommodation, sees sustained demand due to demographic trends and urbanisation. Despite a dip in 2023 investment volumes, the sector remains resilient and significant for investors, representing 20-25% of transactions in the EMEA region.
Hotel
The European hotel sector is showing resilience despite economic challenges, outperforming the broader real estate market. This is underpinned by the constrained supply and the strong operating performance recovery particularly in resort destinations and urban markets driven by leisure travel. This is expected to continue in 2024, albeit at slower pace.
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