European Outlook 2024: The Tide is Turning

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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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