In Q4 last year, transactions totaling around EUR 740 million were completed, the highest quarterly volume since Q1 2022. Czech capital remained the dominant source of investment, accounting for 86% of transactions in Q4. Czech investors were active in all five major real estate sectors and sought assets in other CEE markets.

In terms of asset classes, retail led the way in Q4, capturing 53% of the total volume, followed by offices with 30% and hotels with 11%.

Notable transactions in Q4 included the sale of 16 properties from Redside’s Nova Real Estate fund to ČMN. This portfolio consisted of Prague office buildings and small to medium-sized retail assets in the regions, and was the largest transaction of the quarter. Another transaction worth mentioning was the sale of a 25% stake in Centrum Černý Most in Prague 9. The stake was acquired by RSJ and Upvest, while the seller, Unibail Rodamco Westfield, retained the majority stake.

Transaction activity in the prime real estate market was relatively low, with most transactions being closed by investors looking for Core+, Value-Add and Opportunistic products.

2024 in a Nutshell

“Overall, commercial real estate investment in 2024 reached €1.8 billion, exceeding our original estimates and representing a 57% improvement compared to 2023. This volume is comparable to the level of investment in 2021 and 2022, indicating that the investment cycle is likely already bottoming out,” says Josef Stanko, Head of Market Research at Colliers.

Retail sales enjoyed considerable investor interest, receiving 41% of invested capital. The office sector followed with a 25% market share. This was contributed by the sale of offices from the Nova real estate fund and a significant transaction at the beginning of the year, when the Prague City Hall acquired a 40,000 m² building in the city center for its own use for approximately EUR 140 million.

Investments in the residential rental sector also recorded steady growth, accounting for 14% of the market volume. This relatively new asset class and its first investors are interested in expanding their portfolios. In 2024, REICO entered this market with the acquisition of a residential project in the Nový Opatov project in Prague 4. Other major investors such as AFI Europe, Mint and the Prague Archbishopric also made new acquisitions. AFI Europe is currently the largest landlord in this sector in Prague, owning almost 900 rental apartments.

The hotel segment also saw an increase in activity in 2024. Although hotels represented only 8% of investment volume in 2024, in terms of capital value it was four to five times more than in each of the previous three years.

Investment in the Czech industrial real estate sector accounted for only 9% of the volume. However, finding good industrial opportunities remains challenging, partly due to the fact that around 50% of modern warehouses are held by long-term owners such as CTP and Accolade, who rarely sell.

New price equilibrium

“After a period of rising yield rates in 2022 and 2023, prime yields stabilized in 2024, and the market has thus found a new price equilibrium,” says Josef Stanko, adding that the current market situation strengthens investors’ confidence in their financing forecasts and future property yields.

Currently, prime office yields are at 5.50%, while prime industrial yields are slightly lower at 5.25%. In the retail submarkets, prime shopping mall yields are at 4.50%, shopping mall yields are at 6.00% and prime retail parks yields are at 6.25%.

What’s in store for 2025?

With several large transactions from late 2024 set to be completed in 2025, the year is set to get off to a strong start, leading to a significant increase in annual investment. As a result, deal volume could exceed the €1.8 billion recorded in 2024 by the end of the year. In addition, deal flow may be supported by, for example, the reduction in debt financing costs following the ECB’s rate cut to 2.75% in February 2025.