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Commercial Comeback CBRE’s Stuart Bloomfield says investment market will be first to recover C2

RealEstate June 2010


“Yields are quite stable and have in fact remained at the same level for five consecutive quarters.”


Stuart Bloomfield, associate director and head of capital markets at CB Richard Ellis Prague

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Putting the commercial market in context and looking forward Stuart Bloomfield of CBRE gives the broad view of commercial property By Gabriella Hold Staff Writer


ike its neighbors in Central and Eastern Europe (CEE), the Czech Republic’s commercial property market was greatly affected by the economic downturn, but experts say that going forward the Czech market will separate itself from the CEE pack. The Prague Post spoke with Stuart Bloomfield, associate director and head of capital markets at CB Richard Ellis Prague, to find out about the prospects for recovery, the biggest trends in commercial real estate and how Prague compares with other capital cities in the region.

The Prague Post: What are the biggest trends currently in the commercial property market in the Czech Republic? Stuart Bloomfield: The market in general is still suffering from the effects of the global downturn to varying degrees, depending on the market sector. For instance, the occupier market is currently quite slow, with fewer transactions and a higher number of renegotiations. This is the case for the office, retail and industrial sectors. In contrast, we have seen some activity in the investment market, which should point to the beginnings of the recovery in that sector. TPP: Is the low interest rate environment encouraging investors to invest? SB: If you are talking about lower interbank lending rates, it’s a question of whether that’s being passed on through loan interest rates. Nevertheless, in general, lower rates should result in an increase in appetite or ability to invest, but it currently isn’t one of the main driving influences. The market is still characterized by a combination of very selective buyers and a lack of institutionalgrade stock. However, we have seen that when an institutional-type product does come to the market, there are buyers at sensible levels close to quoted prime yields as was the case in both the Vyšehrad Victoria and Anděl City deals. TPP: How does the market in Prague compare with other CEE capitals? Is it still a good place to invest? SB: Investors have a strong appetite for Poland in general, both Warsaw and regional cities. The Czech Republic is considered comparable but with the focus much more on Prague, at least in the case of offices. We have also seen regional retail deals in the first half of this year, although the investor profile is slightly different. The remainder of CEE is not considered comparable from a risk point of view. In this regard, you

could say that there has been a certain “uncoupling” of Poland and the Czech Republic from CEE toward more established markets in Western Europe in the eyes of foreign investors, which can only be considered a positive development. TPP: What are prime yields for commercial properties at present? SB: Prime yields are currently at 7 percent for offices and shopping centers and 8.75 percent for industrial premises (meaning prime logistics distribution centers).   TPP: Growth rates in commercial property in the Czech Republic are very low or negative at the moment. Will the outlook continue to be negative? When do you expect a turnaround? SB: It depends what you mean by growth rates. Yields are quite stable and have in fact remained at the same level for five consecutive quarters. There were widespread falls in prime yields in many European markets in the early part of this year, which may provide us with an indicator of the direction of the Czech investment market. In terms of asking rental levels, these are also quite stable, although it is possible to achieve better incentive levels, meaning lower effective rates in the current market. This will likely continue until demand picks up but is also affected by limited supply in some sectors, which will influence the supply demand balance back in favor of landlords.   TPP: What about “green” commercial property? Is the market for sustainable office development picking up? SB: Sustainability certification is becoming an increasingly important factor. We see more and more investors requesting sustainable features in properties. Interest seems to be mainly driven by tenants as well as fund shareholders’ expectations. I would say it is still in the early stages, but being able to say that your building has, or at least can, achieve some of the internationally recognized sustainable certifications will certainly help, whether you are leasing or selling a building. I suspect this will continue to grow in the future.

TPP: Is foreign investment in Czech commercial property still healthy? What are the trends like for foreign investment? SB: I think it would be naive to state that foreign investor appetite hasn’t been affected by the wider situation, but that would be the case for most markets in Europe. However, if you look at the deals that have happened this year and even last, it is clear that both foreign and local investors

The Bloomfield file Title: Associate director and head of capital markets at CB Richard Ellis Prague, specializing in consultancy, disposal and acquisition of real estate in the Czech Republic Age: 31 Nationality: English Education: Bachelor’s of estate surveying, honors degree, from University of Nottingham Trent; member of the Royal Institution of Chartered Surveyors (RICS), member of the RICS Czech board Experience: A chartered surveyor with 10 years’ professional experience in real estate, of which six have been specifically working with corporate real estate in the Czech Republic and the remainder in the United Kingdom

are active and looking for sound investment opportunities.   TPP: Can you tell me a little more about the biggest deals you are working on at the moment, for example, advising Hypo Real Invest AG on the 90 percent acquisition of Anděl City? SB: I can’t mention any confidential details, but it’s true. I can confirm that we have advised Hypo Real Invest on the acquisitions of both the Vyšehrad Victoria and Anděl City SO 16 and 17 buildings this year. We are also currently working on the sale of the largest office building sale in the Czech Republic for the past two years, as well as further sales, which we will release to the market later this year.  Gabriella Hold can be reached at

June 2010 |



Prolific Prague 4 How the office market is faring and what’s on deck in the coming years By Emily Thompson STAFF WRITER


s the Prague office market reacts to the decline in demand for space as a result of the global economic crisis, expert forecasts for new supply are cautious at best. Perfectly reasonable considering not a single new project was delivered to the Prague market in Q1 of this year, and new supply delivery for 2010 is not expected to break 60,000 square meters, according to a recent report prepared by King Sturge. What’s surprising is that nearly half of that new space is set to come from one project in Prague 4, and several other projects in the bustling district could potentially be completed in 2011 and 2012. The Prague Post took a look at what sets Prague 4 apart from other business hubs in the city and at some of the projects set to be completed within the next few years. “Prague 4 has been highly competitive compared to other districts,” says Bert

Hesselink, head of office services at DTZ. “It has attracted both foreign companies as well as companies looking to relocate from other parts of the city. It is the Prague office district.” With more than 10,000 square meters of new leases, expansions, renegotiations and subleases in Q1, according to King Sturge, Prague 4 take-up thus far this year is second only to Prague 5. So what’s the secret to the growing quarter’s success? Analysts say it’s location, location, location. “The main advantage of Prague 4 is the excellent connections to the highway and to public transportation via the B and C [metro]


Developed by Passerinvest, the Filadelfie office building will be completed this summer, offering 30,000 square meters of space.

C­ | REAL ESTATE | June 2010

lines,” Hesselink says. “It’s also where people live, so that makes it attractive to employees as an office location.” Developer Passerinvest saw this opportunity and can boast of having the only Prague 4 office project expected to open its doors this year, with construction set to be completed on the Filadelfie office building this summer. Passerinvest broke ground on the project in May 2008, and a little more than two years later, the building will offer tenants nearly 30,000 square meters of office space on 17 floors. Located between Želetavská, U Pomníku and U Michelské školy streets, the site will also have 4,500 square meters of shops and services and 1,000 parking spaces for tenants and the public. The project was financed by UniCredit Bank. As Passerinvest cuts the ribbon at Filadelfie, Skanska will be preparing to break ground on a nearby office project called City Green Court. The developer will rely solely on its own capital to fund the project and is therefore free from the stringent preleasing requirements demanded by banks these days. “We believe in location with office markets, and that’s why we see the opportunity to start [City Green Court] without preleases,” says Pavel Knězů, City Green Court’s project manager. “We see that the number of projects started last year was very low, so we think the market for 2011 and 2012 will be in need of good, quality offices.” One of the main measures of quality Skanska employs is energy efficiency. To that end, the developer intends to obtain a LEED certification, which is an international certificate that denotes the fulfillment of strict requirements with regard to a building’s energy savings, water efficiency and reduction of carbon dioxide emissions. “The LEED certificate is a triple win: It’s a solution for the environment, our customers


Skanska’s City Green Court office building will be LEED-certified for energy efficiency. and our business,” says Britta Cesar, managing director of Skanska. A handful of other Prague 4 office projects could also potentially be brought to the market in 2011, but their completion is contingent upon securing sufficient preleases to satisfy their backers. City Deco will consist of three wings separated by an atrium and will offer 16,070 square meters of leasable office space. Unit sizes will start at 150 square meters, and the building will be connected to the Pankrác Congress Center. ECM has already secured preleases from a few companies, among them MeridianSpa, a company

based in Hamburg, which is leasing 5,800 square meters for 20 years and will offer a variety of spa services. AMA development’s South Point has been less successful with preleases and is still in negotiations to get tenants on board their nearly completed 6,784 square meters of space. More than 30,000 square meters of A-class office from other developers could be finished in 2011, however, ensuring Prague 4’s place as one of the most successful districts coming out of the crisis. Emily Thompson can be reached at

Paŀížská 22

Krakovská 9

+ Luxury & attic apartments for rent in the centre of Prague

+ Luxury apartments for rent in the centre of Prague

+ Romantic building designed in the art of deco style

+ Spectacular view over the Prague Castle and Old Town

+ Air-conditioned attic apartments

+ Air-conditioned, CCTV system and reception 24/7

+ Video-phone connection to the camera monitoring access system

+ Underground parking

Property Management for Krakovská 9, PaŦížská 22

DTZ Czech Republic, a.s. Myslbek, Ovocný trh 1096/8, 117 19bPraha 1 Tel. + 420b226b209b100, Fax + 420b222b322b134, E-mail:

June 2010 |



Green getaway Hotel chain expands with simple, clean décor and even cleaner energy savings C­ | REAL ESTATE | June 2010


The furnishings and color scheme at the newly opened Praha Radlická Hotel rely heavily on shades of green, a clever way to emphasize the hotel’s commitment to energy efficiency and leaving a small footprint.

By Jacy Meyer For the Post


breath of fresh air: The doors at the Praha Radlická hotel silently slide open and welcome you in from the gritty streets of Smíchov. Opened in May, the Praha Radlická is so new you can still smell the fresh coat of paint on the walls. This is Spanish chain NH Hotel’s first foray into the Czech Republic. An “eye for people, eye for details,” is how General Manager Petr Diviš describes the chain. The design is NH standard: cool, modern and refreshing. The lobby itself is

a multi-use space. The reception counter is tucked discreetly to the right upon entering, while straight ahead is the bar. Everything about the hotel is subtle; details are evident, but understated. To the left sprawls the lobby and lounge area. Low cream and beige couches are matched with tables and chairs along the window. The front wall is all windows, letting in lots of natural light. Gauzy curtains block the busy road, allowing guests to steal a few moments of tranquility in this busy Prague district. The walls are done in black, a feature repeated throughout the ground floor. The color scheme isn’t dark or depressing, since

the black is combined with apple green highlights and neutral shades of taupe to brighten things up. A long corridor brings you back to the sprawling breakfast room, the design of which copies the lobby — calm and relaxing with large windows. The hotel backs up to a park, and from the breakfast room guests can access a long terrace with high walls and trees peeping over the top. It’s a peaceful spot not at all expected in the area. Diviš says rooms that face the back have a view of the park. The standard rooms are surprisingly large. Blond, real wood floors are paired with large windows for a refreshing brightness. The June 2010 |



Despite the black walls and minimalist decoration, the ambience at the Praha Radlická is calming, and all the necessary amenities, like meeting room, fitness center, sauna and underground parking, are available to guests. linens are white, highlighted with green. The safe and mini-bar are hidden in a mirrored closet, and the wardrobe is an open style. The desk has a cool feature — what seem to be two huge drawers are actually chairs. Pull the “handles” on their backs and out comes a cubed spot for sitting. A large TV is set into a green frame on the wall, and the minimalist style is soothing. NH Hotel’s focus on green goes beyond the décor, however. “In general, companies want to work with other companies that are environmentally friendly,” Diviš says. “It’s the direction everyone is going, and we are a bit stricter than most in our standards.” Those strict standards have won the chain a European Design Award. Energy-saving measures implemented

C­ | REAL ESTATE | June 2010

at the hotel include presence detectors for lighting, the use of LED bulbs, water filters in the baths and doubleflushing toilet tanks. Cleaning materials are required to have a low impact on the environment, as are the materials used in the furnishings and floorings. The Praha Radlická is a newly built building, and Diviš says he is happy with the design, noting especially the separate spaces and entrances for guests, employees and suppliers. The hotel offers a meeting room, sauna, fitness room and two levels of underground parking. Opening a hotel — especially one with 134 rooms outside the center — might be considered risky in this economic environment, but Diviš says NH Hotels saw potential on the market. Though not directly in the

center, the Smíchov area boasts a vibrant nightlife and some of the best shopping in town. NH plans to expand their model to the rest of the country, having also opened a hotel in Olomouc in May, and another Prague location is in the works, as well. “This is my fourth hotel opening. I say it’s my adrenaline sport,” he says. “It’s always a big challenge. If you are there from the beginning, though, you can give it a little soul, make it special.” The third largest business hotel chain in Europe, NH Hotels begun in Spain in 1978 and now has nearly 400 hotels in Europe, Africa and the Americas. “Our chain is really service, service, service,” Diviš says. “I don’t want to be an ordinary hotel.” Jacy Meyer can be reached at

Praha Radlická

Radlická 46 Prague 5–Smíchov 257 096 111

PROJECTs Tulipa Modřanská Rokle

Location: Modřanská Rokle, Prague 4 Size: 120 apartments Construction completed: May 2010 Developer: AFI Europe All apartments at Tulipa Modřanská Rokle have a balcony, terrace or front garden, as well as cellar space. There will also be the additional option of buying a garage or outdoor parking spaces for each apartment. The project’s location offers a wide range of leisure facilities and options. For instance, there are bicycle and in-line skating paths in close proximity, as well as a golf course, a tennis and squash center, a horse-racing track and a cinema.

Dolina project final stage

Location: Jihlava Size: 80 apartments and 60 family houses Construction began: May 2010 Construction to finish: 2014 Developer: Bouwfonds Approximately 60 two-story attached family houses with a layout of four rooms and a kitchenette with a total area of 121 square meters will be built in the last stage of the Dolina project. Eighty new apartments will be situated in four new blocks of flats with four floors each. These contain flats with one to three rooms with kitchenettes in apartments sized between 32 and 77 square meters. Dolina residents will have convenient access to a playground, sports area and fish pond in the immediate vicinity. Czech architects worked exclusively on the project, designing the building concept in accordance with the demands of modern living.

June 2010 |




Anděl City was turned over to new majority owner Hypo Real Invest AG in May. The building is fully leased to prominent tenants.

INVESTMENT European commercial

property was buoyed in Q1 of this year, according to a recent report by Cushman & Wakefield. The rebound was fueled by further growth in demand, particularly from foreign players, improving debt market sentiment and increased interest in larger lot sizes. The report forecasts retail staying a strong favorite for investors in the Czech Republic, as it is a low risk, low volatility asset that is expected to deliver good rental growth in the future. Some of the major transactions between January and May of this year include JTH Retail Warehouse portfolio, Nestle HQ, and Anděl City 16 and 17. Three more office transactions are expected by the end of June, bringing the total to approximately 75 million euros ($90 million/1.9 billion Kč).

INDUSTRIAL CCI Valves, a producer of

valves for use in the power, oil, gas pulp and paper industries, has moved to a new facility in CTPark Brno South in Brno Tuřany. CCI

C­10 | REAL ESTATE | June 2010

leased approximately 16,000 square meters at the site, which was built to suit the company’s production requirements, with additions like crane ways, crane bridges and upgraded office space.

OFFICE Hypo Real Invest AG has acquired a 90 percent ownership interest in Anděl City, a seven-story, A-class office building in Prague’s Smíchov-Anděl district. The 17.5 million euro transaction represents the fund’s second purchase in the Czech Republic this year, having acquired the Vyšehrad Victoria office building in Prague 4 in March. The property is fully leased to prominent local and international companies like Cetelem ČR, Bank of Tokyo, Hanjin Shipping, Silicon & Software System Česká Republika and RIM International.

TECH Red Hat, an open-source technologies services provider, has expanded its premises in Brno by 1,200 square meters, bringing the total occupied space to more than 3,200

square meters. The new premises are in the Forum Business Centre building developed by Professional Facility Management.

LEASE VZP, the largest health insurance

company in the Czech Republic, has leased 456 square meters at the Futurama Business Park in Karlín, Prague 8. The park consists of five office buildings, totaling 41,300 square meters, which are jointly connected by pedestrian walkways and underground parking spaces. The buildings will be delivered in multiple phases by Immorent ČR.

APPOINTMENTS Pavel Skřivánek has

been named new head of office agency at King Sturge Prague, replacing Eva Lovětínská, who is going on maternity leave at the end of June 2010. Skřivánek is a graduate of the Czech University of Economics and the Czech University of Life Sciences. He has worked in office agency for five years, specializing in regional markets and tenant and landlord representation.

Editorial Emily Thompson Special Sections Editor Tel.: 296 334 440 Advertising Ondřej Jahoda Tel.: 296 334 412 GSM: 723 421 313 Jan Míšek Tel.: 296 334 452 GSM: 731 505 625 Lukáš Zíta Tel.: 296 334 405 GSM: 722 094 405 COURTESY PHOTO

The Stodůlky office building in Prague 5 has been sold to a private Czech investor.

AUCTION Galvas and Professionals real

estate agencies held an auction of new flats and family homes May 27 in Prague. Fifty-six participants competed for 30 properties from 13 projects, and 24 properties were purchased. The auction itself was preceded by tours of the flats and houses on offer, with around 160 potential buyers coming to view the properties.

SALE Czech and Slovak Investment Advisors

(CSIA) have announced the sale of two Prague properties: the 4,400 square meter Stodůlky office building in Prague 5 to a private Czech investor for 250 million Kč, and the Matějková residential project, also in Prague. The fund acquired the Stodůlky property in 2005 and has since managed to achieve full occupancy from companies such as A Keramika (a subsidiary of French conglomerate Saint Gobain) and MB Tech (a subsidiary of Mercedes-Benz). Matějková was sold to CODECO for an undisclosed amount.

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July 21, 2010 Advertising closes: July 12, 2010 Cover image: Walter Novak The Prague Post Real Estate section is a monthly supplement of The Prague Post published by Prague Post, spol. s r.o., under license MKČR5971. ISSN 1210-3934 © 2010 Prague Post, spol. s r.o. All rights reserved. Reproduction in whole or in part without permission is prohibited by law.

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GUIDE Packed with tips and cultural listings for summer visitors to the city and beyond to get the most out of their stay For information about advertising, please call (420) 296 334 400 or e-mail: Out June 30 call now to advertise

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