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Prague City Report
Q2 2016
City Reports
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016 Prague City Report Q2 2016
Economy
Prime Yields
H1 2016 Key Transactions
€490 million of commercial real estate
investment was recorded in Q2 2016
contributing to an H1 2016 total of €950
million. 25 transactions in H1 provided an
average transaction volume of above €38
million. The retail sector reported a 47%
share of total volumes and was the most
traded asset class in H1 2016.
The Czech market is increasingly gaining
the attention of new global investment
sources and in H1 the market witnessed
two transactions by South African investors,
NEPI and Rockcastle, who acquired
shopping centres in regional cities.
Economy & Investment G
DP
Gro
wth
Q1
2016
Infla
tion
June
201
6
y-o-
y ch
ange
Une
mpl
oym
ent r
ate,
Cze
ch R
ep.,
June
201
6
5.2% 3.0% 0.3%
High Street Shopping Centres Office Industrial Retail Parks
4.0% 5.0% 5.0% 6.5% 7.5%
Investment Overview
The largest transaction of the period was the sale of the Atrium portfolio by Atrium European Real Estate to Arcona Capital for ca. €100
million. During H1 2016, domestic equity further cemented its position within the well-diversified Czech capital pool; H1 saw 65% of
offices and 59% of retail purchased by Czech entities.
64% Office
41% Retail
23% Industrial
47% 53% Mixed
52% Hotels
International Domestic
Investment Activity: International vs. Domestic
48%
36%
77%
59%
Timing Property Market Price Seller Buyer
H1 2016 Atrium Retail Portfolio Various ca. €103 million Atrium Arcona Capital
H1 2016 Forum Liberec Liberec Confidential Tesco Rockcastle
H1 2016 Na Příkopě 23 – 27, Prague 1 Prague ca. €80 million Private investor LaSalle Investment
Management
H1 2016
Ret
ail S
ales
, May
201
6
y-o
-y c
hang
e 4.0% Industrial production,
May 2016 y-o-y
8.6%
Purchasing power per inhabitant,
Prague, 2015
€9,598
Source: Czech Statistical Office 2016, MPSV 2016, GFK Incoma Czech Republic 2015
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016 Prague City Report Q2 2016
New Supply
Vacancy
Prime Rents (€/sq m/month) Key Transactions
Demand (sq m)
Office Market
Office supply will remain limited for the remainder of 2016. Overall in 2016, we expect
approximately 32,400 sq m to be completed which would be the lowest new annual
supply level ever recorded on the Prague office market. New supply should increase
again in 2017.
Absorption:
49,300 sq m
2015
Q2 2016
19.5 19.5
2014
19.5
15% 12% 13%
13%
11%
18%
11%
13%
8%
21%
30,300
82,300
Renegs / Renewals Net Take-up
Building Occupier Contract type Deal size (sq m)
Enterprise Office Center CSC Computer Sciences new occupation 9,428
Zlatý Anděl NN pojišťovna a penzijní
společnost renegotiation 8,300
Aspira Business Centre Livesport pre-completion 5,875
Anděl City (Cetelem) Cetelem renegotiation 5,240
Aviatica Vltava Labe Press new occupation 4,045
Under Construction (sq m)
2016 2017
175,800
20,300
to be completed in 2016 and 2017
Property Submarket Size (sq m) Quality
Kotelna Park Prague 5 – OC 6,457 New
Classic 7 Phase III Prague 7 - IC 5,550 New
CC = City Centre, IC = Inner City, OC = Outer City
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016 Prague City Report Q2 2016
Retail Stock in the Czech Republic Q2 2016 New Market Entries
Prime Rents in Prague (€/sq m/month) Shopping Centre Density / 1,000 inhabitants
Under construction (sq m) to be completed in 2016-2017
Retail Stock in Prague by Property Type
Retail Market
Existing retail stock
Shopping Centre Retail Parks High Street
110€
8-10€
190€
Retailer Location Type of Retail Quarter
Cremieux Myslbek Fashion Q2
Patek Philippe Pařížská Watches Q2
Hamleys Na Příkopě 14 Toys Q2
Pinko Pařížská Fashion Q2
Longchamp Pařížská Accessories Q2
NYX Cosmetics Nový Smíchov Health & Beauty Q2
84%
6%
8% 2%
Shopping Centres Retail Parks Department Stores Factory Outlets
Source: JLL, 2016
Czech Republic Prague
1.02
Mil. sq m
3.75
Mil. sq m
2016 2017
58,000 75,000
0 100 200 300 400 500 600 700
SerbiaUkraineGreece
BelgiumBulgariaHungary
RussiaTurkey
RomaniaSlovakia
PolandCzech Republic
FranceCroatia
ItalyPortugal
SpainUnited Kingdom
FinlandSweden
IrelandNetherlandsLuxembourg
Average Density: 253 sqm
GLA / 1,000 inhabitants
Brno
334,000
sq m
Ostrava
315,000
sq m
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016 Prague City Report Q2 2016
Major New Completions
Under Construction (sq m) Prime Rents (€/sq m/month)
Industrial Stock by Regions
Stock (millions sq m) / New Supply (‘000 sq m)
Demand (sq m)
Vacancy
Industrial Market
2015 5.69
568
Q2 2015 5.27
103 Q2 2016
5.96
182 Existing stock
New Supply
Prague 3.80 - 4.25€
Brno 3.90 - 4.25€
Pilsen 3.75 - 4.20€
Absorption
137,900 (sq m)
262,800
85,600
In Q2 2016, new supply reached 182,400 sq m when 12 new
projects were delivered to the market. Over 36% of new
completions was delivered on a speculative basis. Another
213,900 sq m is currently under construction. The share of
speculative versus non-speculative construction is 43/57 .
24,400
Q3 2016 Q4 2016 2017
106,000
83,600
to be completed in 2016/2017
Logistics Park Region Size (sq m)
Mountpark Pilsen Pilsen 43,900
BrnoPark I Jihlava 25,900
P3 Prague D8 Greater Prague 23,400
Renegs / Renewals Net Take-up
39%
16%
14%
7%
7%
17%
Greater Prague Pilsen Brno Ostrava Central Bohemia Other
Q2 2015
6.9%
Q1 2016
4.2%
Prague
3.2%
Regions excl. Prague
5.8%
Q2 2016
4.7%
www.jll.cz
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without
prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer
any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.
Tewfik Sabongui
Managing Director
+420 224 234 809
Blanka Vačkova
Head of Research
+420 224 234 809
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