"Why are they keeping the base rate a full percentage point above the euro? We might as well just take the euro. We have the koruna, so we should have at least the same interest rate..."
Is it possible that a former minister of finance and Czechia's current prime minister wouldn't understand the basics of central bank functions? You wouldn’t know it from his recent Instagram story.
But Andrej Babiš wasn't done. "They can't squeeze inflation down at all, that's just that's just theoretical blather. It's unbelievable and I protest and will keep protesting, because first we need to do everything possible to get construction moving," he said.
If you decode that, it’s a convoluted way of blaming the lack of affordable housing on high interest rates.
Through the magic of social media, politicians can now bypass journalists to communicate absolute nonsense to their followers. There's little chance that Babiš's followers understand that lower interest rates would make the koruna less attractive, weaken the currency, and therefor drive inflation up.
Babiš also opted not to mention that the Czech economy has structurally higher inflation than the eurozone, a tighter labor market and is far more vulnerable to the ongoing Middle East energy shock.
As a business owner, he'll know better than most that the only possible direction for rates in the coming months is up.
As a populist, however, hew knows better than most that explaining hard truths to the public would only be self-defeating. He's only "fighting" for lower rates because an economically stressed electorate wants to see somebody doing "something".
More to the point, the unaffordable housing crisis has many causes. Lower interest rates might help developers sell more product, but they wouldn’t solve the problem.
IBF BBQ
Save the Date! The always-excellent IBF Real Estate and Garden Party 2026 takes place on June 18 at Letenský zámeček Gardens. It’s a great send-off before the holidays offering excellent catering and high-quality networking. And this time, it’s even a chance to watch the Czechs play South Africa in the world cup! Personally, I’m pleased that the beneficiary of the charity tombola will be ThePrime Foster Fund, so I hope lots of you show up. For more information and registration details, visit the event web page.
People
REassurance has hired Dr. Viktor Benedek to bolster its CEE title and W&I insurance practice. Benedek brings 20-plus years of experience in legal and transactional work across Hungary, Romania, and Poland, most recently as European Underwriting Counsel for a major mono-line title insurer. The Budapest-based broker specializes in real estate transaction insurance across the region.
Czech industrial developer Demaco has announced that CFO Zdeněk Raus is now an equity partner in the business. It’s an important move for the company, as it consolidate Raus’s long-standing role in managing the group's finances and internal operations in close connection with founding partner Tomáš Budař and partner Jaroslav Kaizr. With Demaco’s assets now approaching CZK 2 billion, Raus says the step reflects his deepening commitment to the group.
Stefan de Goeij stepped up to chair the RICS European World Regional Board. Based in Prague as Cushman & Wakefield's Head of Sustainability & ESG for CEE and the Nordics, he brings 25-plus years in real estate to the job. He also joins the RICS Global Members Committee.
RE News
Karel Komárek's KKCG has reportedly bid £282 million for One St James's Square, BP's global headquarters in central London, partnering with British developer YardNine. The vendor Hong Kong's Lifestyle International Holdings had wanted north of £350 million. Komárek snapped up The Burlian in Mayfair late last year; landing BP's HQ would plant the Czech group firmly among Europe's trophy-office collectors. The timing of the sale is significant: BP plans to downsize or even move. Prices on London's appear to have fallen to attractive prices...at least relative to a few years ago.
Horizon has delivered the first phase of Rezidence Blízká in Karlín — 135 units begun in March 2024. Phase two's 93 units are due by the end of the year. LOXIA-designed and PORR-built, the project sits between Invalidovna and Křižíkova metro. Only 1+kk units remain, hardly a surprise, given the location.
Manova Partners is doubling down on Poland to grow its €1.4 billion CEE portfolio, drawn by 3.5% GDP growth forecast (versus 1.4% EU average) and a belief that Warsaw is Europe's fastest-growing city. (No doubt the €4.5 billion in transactions for 2025 provides some reassuring liquidity cover.) The Munich-based manager already holds more than €800 million across 600,000 sqm of Polish office and a total of 19 industrial properties. It also manages €400 million in Czech offices.
Savills estimates data centers will soak up 780,000 sqm of extra logistics space across Europe's five core markets over the next three years. With 231 facilities under construction continent-wide and former warehouses converting to server farms (higher yields, go figure), the ripple into industrial is accelerating. Czechia counts 55 operating data centers, though grid constraints keep hyperscalers out for now. Savills expects that could change, however, after 2027. According to Savills, every 1 MW of data center capacity requires approximately 670 - 980 sqm of logistics space.
Czech shopping centers squeezed vacancy to 2.8% in 2025, just half the European average and a historic low, according to CBRE. However, footfall and turnover rose just 1.2% and 2.1% respectively, while rents climbed 2.3%. These all trailed the country's inflation figures, so profitability pressures linger. "Footfall is no longer automatic and directly reflects what shopping centers actually offer — so it has to be actively cultivated," says CBRE's Jana Prokopcová. "Those that invested in their tenant mix and customer experience got more out of last year. The rest stagnated." In the F&B sector, cafes and ice cream shops saw the biggest growth. The biggest mall sector was of course fashion, which occupies 37% of the average mall.
PSN opened Grand Space, an 11-desk coworking with meeting rooms and terrace, inside the reconstructed Grand department store in Pardubice. The Josef Gočár functionalist building won Best Reconstruction Project at ThePrime Awards. The broader 3,500 sqm renovation added a food hall and boutique cinema alongside retail.
Istroschem Reality has brought in Penta Real Estate as a partner for the overhaul of its 1.6 million sqm brownfield complex in Bratislava. The two are now deep into planning a mixed-use urban quarter to replace the former chemicals site, but will need to carry out an environmental cleanup before any construction goes ahead. The partners will hold an urban planning competition for the project in 2027.
AFI acquired six Romanian retail schemes from MAS in what iO Partners calls the country's largest retail transaction ever. Their combined GLA is 125,500 sqm, with projects located in Ploiesti, Zalau, Baia Mare, Roman, Sfantu Gheorghe, and Barlad. The structured sale closed in roughly six months.
Poland's industrial market roared back in Q1 with gross take-up of 1.58 million sqm (+47% y-o-y) and net take-up spiking 78% to 850,000 sqm. AXI Immo notes that’s the best result since 2022 and that vacancy dropped to 7.3%. However, speculative starts shrank to 37% of the pipeline. If there’s any caution on the side of industrial developers, however, investors don’t share it. The €445 million industrial investments made up 44% of the volume of all Polish CRE transactions in Q1. On its own, W. P. Carey's deal for the Raben logistics portfolio came to €169 million.
ThePrime Reader
-Zdeněk Raus named equity partner at Demaco
-New podcast! Pavel Novak (Savills) on the worsening office squeeze
-Bubble Tea’s spectacular bankruptcy
-Five fund targeting Czech senior care real estate’s critical lack of supply
-Charnwood’s Malešice Business Park targets July opening
-Penta launches new office project on Hybernska
-Petr Koljadenko joins Goldbeck
-What does America’s office crisis mean for CEE?
-Filip Slabotinský (DMC Design & Engineering): We take a systematic approach to design
-Savills Acquires Eastdil Secured for $1.1 bn
-Four residential permits in one week: Horizon Holding, CPI, Geosan, Central Group
-Babiš blames LPP for arson attack at its Pardubice factory
-Stats office says 2025 economic growth stronger than expected
-ZDR Investments: From Zero to CZK 20 Billion in Eight Years — And Still Shopping Conservatively
-New Šeberov retail park wins zoning decision after a decade of struggle
-Stats office says 2025 economic growth stronger than expected
-User-First Development: Demaco’s DMC Paskov and the Power of Long-Term Industrial Vision
-Spire Capital Partners agrees strategic capital for BONARD