PRAGUE-Capital investment in Czech Republic commercial property rebounded by 233% in the first half, but was still low at $280 million compared with 2005-2008. But the market remains dominated by local investors with no sign of concerted return of foreigners, according to realtor DTZ.
Save for some Austrian investors and a group from the US, it “would look like a local market driven exclusively by domestic capital,” said DTZ's Ryan Wray. Differences in preferences of domestic and foreign investors occur frequently. Austrian fund Hypo Real Invest, which has realized two Czech transactions this year and is planning more, focuses on high-quality office properties with creditworthy tenants and long-term contracts. The most active domestic investor to date is CPI, which is also seeking well-located properties with long-term leasing and a strong tenant base, but across various sectors.
As international investors shifted attention to well-established traditional markets in the crisis and examined investments more thoroughly, domestic investors have stepped in to fill the gap. Foreign competition for prime property has also been weakened by the passivity of German open-ended funds in the Czech market. Their market share shrank to under 5% in 1H10 from over 40% in 2008 and 2009. Overall thought, first-half growth and transactions prepared for the second half are positive signals but do not necessarily indicate full recovery.
Separately, Cushman & Wakefield predicted domestic investment into commercial real estate by Czech-based funds is likely to reach more than 50% in 2010 for the first time since 1998. This is up from 15% in 2009 and the 10-year average to 2008 of 5%.
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