PSN has installed MEANDR by Matěj Hájek in its Vanguard project
Meanwhile…
It’s not just old societal and political norms that are getting thrown out the window. The old economic rules are trending increasingly fuzzy. These past months have reminded me of that that unnerving feeling I often get at the end of a long drive, in heavy D1 traffic, 40 km from Prague. Suddenly, everyone’s in a hurry and you get long strings of cars in the left lane driving too fast and too close to each other. "It's going fine, so why go slower," whispers the over-caffeinated collective logic.
In the real world, inflation isn’t out of control anymore and Czech GDP could rise 2% this year. Europe is giving off mixed signals, but that’s a whole lot better than giving off strictly negative vibes. "We're going to have a record year," the head of one of the real estate agencies told me, referring to his capital markets department. This shouldn’t be surprising.
But I’m finding it hard to shake a more general feeling of unease. For starters, the price of gold has risen 45% over the past 12 months to $3,650…and it keeps climbing. Has there ever been an instance of huge leaps in the precious metal’s price that didn’t end up foretelling some kind of crisis?
Meanwhile, economic nerds are losing sleep over rising long-term bond rates. This doesn’t usually happen when there’s an expectation that central banks will soon cut short-term rates (like now). Like record gold prices, psychotic bond markets are a reliably bad omen.
Then there’s the stock market, which continues to defy gravity. Unfortunately, investors are acting like surfers at the end of a long day, looking to ride those final last waves. The most recent excuse for bullish activity is that the U.S.’s formerly independent Federal Reserve will likely cut interest rates next week. Thanks to a profound groupthink feedback loop, few seem to care that P/E ratios now sit at record highs.
Just imagine if office yields were sub-3% but investors were still fighting to buy the next building in their hunt for yield compression. You’d say they were crazy.
Luckily, that’s not where yields are in Prague. And frankly it’s why I'm far more concerned about what the high-flying S&P says about the global economy than I am about the recent surge in commercial real estate transactions here at home.
To put it differently, I would love to see the stock portfolios of the skeptics who claim Czech real estate funds are overpaying for assets. Ten to one they'll lose their own money before the funds do.
Russia attacked NATO two nights ago, sending nearly two dozen drones into Polish airspace. There doesn't appear to have been any specific military targets. Instead, the purpose was probably to watch if anyone tried to shoot them down, and to find out if NATO will actually stick up for Poland. Frankly, it’s incredible this didn’t come sooner, since Russians have been watching Ukrainian drones attack their industrial base for months now.
Earlier this year, European leaders declared they were ready to stick up for themselves. It’s time to walk the talk. Will they establish a no-fly zone over western Ukraine? Appeasement (i.e. doing nothing) would be the most dangerous option.
Surely, this just makes it obvious how calamitous Europe's situation would have been if Ukraine had lost quickly in 2022. A victorious Putin would have dictated both Europe's energy policy and its security arrangements. Trump's second term would have been an even greater disaster for the EU.
Instead, thanks to Ukraine's willingness to stand up for itself, Russia's army is now in tatters and nearly one-third of its oil refining capacity has been decimated. Europe certainly could have done more, and sooner, to help. Luckily, it’s not too late help the only country in the world both capable and willing to fight Putin.
RE News
Penta Real Estate has consolidated a five-hectare industrial site just north of Passerinvest's Brumlovka business center, planning 450-unit residential development. The Prague-South train station formrs the site's eastern border, while the Botič creek marks its northern side. Penta acquired parcels from multiple owners along Ohradní Street, which is one of those deteriorating suburban industrial sites that no one will miss. Construction would go forward in phases, possibly beginning within three years, creating a total of up to 28,000 sqm of new residential space.
The average Czech consumes 29 kg of chicken per year. That helps explain why: a) Popeyes restaurants always have big lines when they open and b) KFC now has more Czech restaurants than McDonald’s. More importantly, it’s part of the reason Azzurri Group is confident about rolling out another fast food chicken chain. “Dave’s Hot Chicken is a brand that appears on the market once in a generation,” says Azzurri Group’s CEO Steve Holmes, with a heavy helping of cringe. He’s on the lookout for local partnerships to work with.
On a related side note, does anyone still believe Five Guys will ever show up in Prague? I read in HN that the problem is connected with the master franchiser, but that negotiations are moving into their final phase. Frankly, that sounds like code for “who knows what’s going on?” Spare a thought for the owners of the new Máj, who have been losing potential rent on the space they reserved for the Czech Republic’s first Five Guys since opening 15 months ago. It’s definitely not the way to build confidence with other landlords.
In a move that illustrates the growing importance of individual investors in the residential market, Penta Real Estate has taken a 50% stake in Bureš & partneři, a company founded by rental expert David Bureš. The new company, to be called Flet, will provide management services to investors as well as tenants. In practice, it means tenants have a company to call if something breaks down in their flat. On the other side, investor/landlords can consult with the company’s experts about what flats to acquire and how best to reconstruct them before handing over the management responsibilities. Bureš says his company already manages over 700 flats in Prague. For Penta, the attraction is clearly to be able to offer the services to potential clients who want to invest in apartments, but lack the time and/or skills to manage them effectively.
The final piece of Penta Real Estate news, is that the company has completed the sale of Bory Mall in Bratislava to the ZFP real estate fund. The deal has received Slovak regulatory approval, to complete the year-long process. The 54,000 sqm shopping center enjoys with 97% occupancy at its 200 stores. Penta will continue to manage the mall as it develops the surrounding zone.
GARBE has received a building permit for the second phase of its project in in Pohořelice, 25 km south of Brno. It will add 80,000 sqm across two buildings, making the total capacity of the GARBE Brno South development 111,000 sqm. The developer is targeting high-bay warehouse operators by offering 18-meter clear heights. Construction completion is expected within eight months of groundbreaking. It’s the German developer’s fourth industrial park in the country since its entry in 2020.
Urbanity has published its 2024 ESG, which includes Scope 3 greenhouse gas emissions figures for the first time. The company now tracks indirect emissions from its 290-supplier value chain—all contractors include ESG provisions in agreements. Urbanity ranked TOP 5 in Czech SME ESG Rating for second consecutive year, a first for a real estate firm. The developer works with Frank Bold Advisory on its reporting.
The developer PSN has installed a custom glass relief sculpture by Matěj Hájek entitled MEANDR in the wellness zone ceiling of its Vanguard residential project. The layered glass artwork depicts the Vltava riverbed near Vrané nad Vltavou, which is visible from Vanguard's upper floors in Modřany. The piece (pictured above) is intended to complement PSN's conversion of the former Microna factory into luxury loft living.
Czech railway planners now envision 768 kilometers of high-speed track to be built along five primary rail corridors. The idea is to connect regional centers with Prague, Brno, and Ostrava within one-hour travel times while integrating into Europe's broader high-speed rail network. The cost: around CZK 1 trillion. The busiest section of the VRT network will be between Běchovice and the Prague East station in Nehvizdy. Berlin traffic will be funneled from Balabenka northward towards a new station in Lovosice.
ThePrime is a proud media sponsor of the annual conference by the Czech Association of Shopping Centers on September 30. This year’s edition is entitled “Where does the money go?” Get your tickets here.
Q&A: Pavel Sovička (Panattoni)
The general public is often horrified at all the construction over the last 20 years and many people wonder if there’s even room to build anything else.
Czechia’s built environment is just 4.7% of its overall area whereas the German coverage reaches 7.8%. It may seem like a lot already, but in reality the percentage of developed land is comparatively low. Even on a regional level, buildings cover just 1,7 %. From 2009 to 2022 the built environment in Czechia grew by 7%. In Belgium and Netherlands, it grew by 20 % during the same period. That’s just half of a percent growth each year in Czechia!
I think there’s an opportunity here to enable faster growth but it’s not being utilized. The volume of space set aside as agricultural land here is 53.2%, which is the 5th highest total in the European Union. The EU average is just 38.8 %. And yes, we can build on brownfields, but the whole Czechinvest database holds just 15 000 ha of sites. To put that into context, this is just 0.2 % of the Czech country area. It makes sense to reuse sites, but doing so won’t change the picture significantly on its own.
You mentioned food, which is an incredibly sensitive subject. Politically, it’s easy to attack developers for exploiting agricultural land, which Czechs see as a natural resource.
There IS a problem, but it’s not developers. Czechia has 41,000 square kilometers of farming land, and yet we’re still highly dependent on food imports for a population of just 10 million. The Netherlands has far less agricultural land (just 21,000 km2) for its 18.3 million people. Yet unlike us, the Dutch are self-sufficient.
We should focus on the efficiency and productivity of essential food and food production instead of protecting unsustainable farming methods. Especially since they’re blocking more effective use of some of this excess land…
Read the full interview
Quotes
🗞️"Rising business confidence in the economy is primarily driven by the improving situation in selected service sectors, where demand expectations increased significantly, especially in the financial sector. The confidence indicator for services has reached its highest level since April 2008." Jiří Obst, Czech Statistical Office
People
-Denisa Gelatková has been named director of Blue Assets CZ&SK, following the exit of Robert Chmelař. Gelatková’s position in the company since 2023 was Regional Property Management Director. She brings previous experience from work at Pinnacle, Lidl, and Knight Frank to the job. Part of the Panattoni Group, Blue Assets manages over 1.5 million sqm of commercial real estate across Czech Republic for more than 170 tenants.
Biz News
Czech door manufacturer Doornite partnered with Spanish metal frame producer Soleco to launch Seguridad Pro+ doors targeting public buildings and schools. The Jihlava-based firm expects CZK 600 million revenue in 2025—10% growth from 2024. Doornite produces 500,000 doors annually, exporting half to 12 European markets, and aims for 10% annual growth through partnerships and acquisitions.
Global logistics leader Kuehne+Nagel signed a lease for 10,600 sqm in Panattoni Park Prague Airport II near Pavlov, expanding the industrial zone to 140,000 sqm . The fossil-fuel-free facility targets BREEAM Excellent certification and features heat pumps. 1,600 sqm of the space will be dedicated to offices. Construction began in August and should complete next April. Accolade is the investor in the D6-adjacent project.
HSF System SK is the 19th company nationwide to receive specialized construction certification for complex infrastructure projects—bridges, hospitals, nuclear plants, highways. The certificate was made mandatory under amendments made to the building law back in April. HSF System is part of the PURPOSIA Group holding.
CzechInvest is claiming success in attracting two Taiwanese investors to the country. CTi Cable will begin producing data cables in P3 Park Prague D8. Its products are used for HDMI, USB and ethernet cables and will be shipped from Prague to other European markets. CTi claims it will be adding production capabilities for AI, autonomous vehicle and aeronautic applications. The new plant will be highly automated, meaning it will need dozens, not hundreds of employees. The other company is C-Tech, which provides batteries for Acer, Dell, HP and LG laptops. It's expanding production to include car batteries and is currently looking for a Czech location to set up shop in. HN reports that CTP is party to the discussions.
Czech firm VARS BRNO has unveiled CleveRA Car, a Mercedes Sprinter that acts as a mobile road diagnostic vehicle that provides high precision road surface analysis at up to 80 km/h. It enables real-time pavement condition monitoring for predictive maintenance planning. If you’re into that kind of thing, you can check it out this month at the Brno Road Conference.
ThePrime Reader
-Pavel Sovička (Panattoni): Productivity is the problem. Not developers
-David Sajner joins Savills
-Energy efficiency still low in Prague office sector
-Crestyl achieves planning breakthrough on Savarin
-Michal Sotak (Cushman & Wakefield): Emotions drive investment
-Michal Bilý (108 Real Estate): Q2 new industrial leases strengthen
-Robert Ides (ARETE): We’ll recycle our equity abroad
-Martin Klán (Amadeus): Nový Máj’s butterflies should stay
-Karin Shalev Shogol (AFI CZ): We want 5,000 flats in 5 years
-Savills: H1 investments soar to €2.1 billion in Czechia
-Fred Hlobil (FH+ Real Estate): New money is coming into young sectors
-CPI offers to buy back 7% bonds at 7.75%
-Reality check for landlords: Prague Q2 resi rents fall
-New Podcast with Mark Robinson (EnCor Wealth Mgmt)
-Weak demand & resi boom stunt office development
-Huge changes coming to Prague’s high street
-Savills strengthens Prague valuations team
-Gen Z’s Return to Office Comes at a Price