TheWrap: Are Czech Real Estate Funds Overpaying?

Czech capital in London is no longer a curiosity. It's a pattern. The latest example is that Karel Komárek's KKCG Real Estate is off to Old Blighty, appointing Peter Holden to run its new UK division. Until recently, he was head of global real estate investments at Partners Group. The focus: premium, sustainable offices in West End, Midtown, and the City. KKCG has already acquired a building near Oxford Street in autumn 2025, a building which doubles as its London HQ. The expansion follows a CZK 1 billion secured bond issue by KKCG Real Estate Financing, extendable to CZK 2 billion, with a fixed 6.5% coupon earmarked for portfolio growth. No doubt that was at least in part to finance its partnership with Penta Real Estate (partnered with Ballymore on a 52-storey tower in Canary Wharf). The groups are joining up with Daniel Křetínský who got there first — albeit through the side door of the Royal Mail acquisition via EP Group.

Speaking of unnamed tenants, an international company will relocate its Czech HQ to Aviatica in Prague 5 in H1 2027, taking 11,000 sqm — the largest signed office relocation of 2025, per tenant rep Prochazka & Partners. The deal replaces Oracle as anchor tenant; the new occupier will be the building's second-largest at completion. Manova Partners is the landlord.

Czech residential prices rose 12% on average in 2025, with the biggest jumps taking place in Prague, Central Bohemia, and South Moravia. Surprisingly, the growth concentrated in older stock, which outpaced new builds. Second-hand flats were up 18% nationally, while panel building units now go for CZK 70,987/sqm (+CZK 11,335 YoY) and brick stock flats sit at CZK 80,613/sqm (+CZK 8,464). New-build first sales hit CZK 139,820/sqm (+9%), but resales of near-new units ran harder at CZK 131,608/sqm (+13%). Family homes averaged CZK 6.2 million, up CZK 0.9 million on the year. The affordability gap is widening structurally. Prague and Brno older flats trade at roughly 3x small-town prices and 2x mid-size city levels — a spread that keeps compressing without a step-change in delivery where demand actually sits.

The 2026 CRE deal pipeline is already substantial, according to Colliers. It tracks around €1.5 billion in equity capital ready to deploy, with fundraising ongoing, and an identified transaction pipeline of ca. €3 billion. Offices are expected to take the largest share — high tenant demand meeting genuinely constrained supply. The binding constraint for the year ahead isn't capital. It's product. The Czech investment market closed 2025 at €4.3 billion — a new all-time record, clearing the 2016–17 highs by a meaningful margin. Colliers writes that €1.84 billion came in the last quarter of the year. The headline Q4 transactions: Palladium (retail + offices, Republic Square) to Reico; Harfa Business Centre B from Kaprain to the Ministry of Finance; and the three Česká spořitelna buildings above the Budějovická metro station to Penta Real Estate. There’s no space to include the more than 100 deals, so to name just a few, there were Campus Science Park Brno, Forum Karlín, Aventin Shopping Znojmo, and the Ibis and Diplomat hotels. Yield-wise, prime offices held at 5.25% (–25bps YoY), prime industrial compressed to 5.00% (–25bps YoY) on tight vacancy and rental growth, while prime high street retail held firm at 4.50% and shopping centers at 6.00%.

Prague office vacancy closed 2025 at 5.9% — the lowest since early 2020 — and iO Partners predicts that the indicator is set to fall even further. Historically low completions last year have compressed supply while demand remains above the five-year average, with 60%+ of space under construction already pre-let. The near-term math suddenly looks attractive to developers. Skanska is moving first. Its Key project on Pankrác, totalling +36,000 sqm, is due to get underway this year, even though there are no pre-let conditions attached. Crestyl's Boka Pankrác adds a second pin to the same node. In that case, the contractor is reported to have been selected. Several office tenants are in advanced talks, but that’s usually the case. Then there’s Passerinvest Group, which was out ahead of everyone. Hila (offices, rental apartments, retail) broke ground without pre-agreed tenants; 2025 saw two more starts — Orion at Brumlovka and Sequoia in Roztyly.

Panattoni crossed the 2 million sqm mark recently when it handed over the 214,000 sqm Panattoni Business Park Cheb to its tenant in February. It’s the largest floor plate the developer has delivered in Czechia. The portfolio's headline projects tell the story of where industrial demand has been going: Amazon in Dobrovíz and Kojetín (the latter a four-storey, 187,000 sqm robotics DC whose rooftop PV covers up to two-thirds of energy consumption), Panasonic and Shape Corp. at Panattoni Business Park Pilsen West II, WITTE and ZF Automotive in Ostrov. Panattoni has been targeting cutting edge product from a sustainability standpoint as well — 1.4 million sqm of its completed portfolio carries BREEAM New Construction certification. And all new schemes target Excellent or Outstanding. Director Pavel Sovička says the AUTODOC and Kaufland e-commerce buildings at Cheb South held the world's highest BREEAM industrial score at completion.