Prague City Report Q2 2015
Inflation y-o-y change Unemployment rate Economy / Investment Market Economy Investment Activity: International vs. Domestic GDP Growth y-o-y 2.8% 6.2% International Domestic Office 25% 75% Retail 97% 3% Wages y-o-y change Industrial 66% 34% 0.8% 4.6% Mixed 100% 0% Residential 0% 0% Hotels 0% 100% Prime Yields 5.0% 5.25% 6.0% 6.75% 7.5% High Street Shopping Centres Office Industrial Retail Parks Investment Overview Ongoing deals and the continued weight of capital targeting Prague carry the potential of a record year in 2015. Importantly, the market is no longer relying on prime property only; liquidity has returned to both core-plus and value-add profiles. A key trend observed in H1 has been the continued emergence of Czech Qualified Investment Funds. Following pension reforms, QIF s are now active, competitive parties across a range of risk profiles and on increasing lot-sizes. Key Transactions H1 2015 saw a transactional volume of 1.2 billion as the momentum from 2014 shows no signs of abating. An 89% increase on the same period of the previous year s figure was underpinned by the sale of Palladium. H1 2015 s volumes have only once been higher with 2007 s record 1.50 billion H1 figure, which also featured Palladium, that time as a forward sale. Timing Property Market Price Seller Buyer Q1 2015 Palladium Prague ca. 570 million Hannover Leasing Union Investment Q2 2015 OC Arkady Pankrac Prague ca. 165 million Unibail/Rodamco Atrium Q2 2015 AICEPF Portfolio (Oasis, Avenir, Karlovarska BP) Prague ca. 110 million AVIVA Investors Lone Star
Office Market New buildings Demand (sq m) Property Submarket Size (sq m) Quality BB Centrum DELTA Prague 4 IC 32,535 New Crystal Prague Prague 3 IC 12,828 New The CC = Greenline City Centre, IC Kačerov = Inner City, OC = Outer Prague City 4 - IC 13,682 New CC = City Centre, IC = Inner City, OC = Outer City Overall in 2015, we expect approximately 183,300 sq m to be completed which would be the highest level delivered since the record year of 2008. In 2016, office completions are expected to drop to a level of around 40,000-50,000 sq m. Renegs / Renewals 63,800 65,900 Absorption: 68,796 sq m Net Take-up Vacancy Under Construction (sq m) to be completed in 2015-2017 14% 19% 18% 36% 18% 19% 24% 9% 20% 14% 88,000 32,000 28,000 2015 2016 2017 Prime Rents ( /sq m/month) Key transactions 20.5 19.5 19.5 Building Occupier Contract type Deal size (sq m) BB Centrum Gama O2 renegotiation 29,574 Corso Court Expedia pre-completion 6,487 Classic 7 Phase III ComAp pre-completion 5,860 2014 VN 33 Confidential new occupation 4,043 2013 Q2 2015 The Park - building 6 Accenture renegotiation 3,053
Retail Market Supply ( 000 sq m) / Stock (million sq m) 2015 Market Entries 2.54 2.59 162 80 2.65 26 2013 2014 H1 2015 Existing shopping centre stock New Supply Retailer Location Type of Retail Quarter Twin Set Železná Fashion Q1 Kusmi Tea Paris Nový Smíchov F&B Q1 Jeff de Bruges Nový Smíchov F&B Q1 Tiger Václavské náměstí Home accessories Skechers Atrium Flóra Footwear Q2 Tory Burch Pařížská Fashion Q2 Retail demand remains high, but selective. It focuses on prime shopping centres and prime high streets. Franchising remains a preferred option as opposed to direct operation. Q1 Rents ( /sq m/month) 100 8 180 Retail Density in Czech Counties Shopping Centre Retail Parks High Street Major Developments Under Construction Retail Stock in the Czech Republic by Property Type Property Developer Size (sq m) Aupark Hradec Králové HB Reavis 26,000 Central Jablonec Crestyl 13,000 Centrum Chodov extention Unibail Rodamco 35,000 The Prague Outlet 1st phase Dreitonel 12,000 26% 3% 1% In Q2 2015, no new retail schemes were added to the market. 97,000 sq m is currently under construction. By the end of 2015, another 11,000 sq m will be completed. 70% Shopping Centres Retail Parks Department Stores Factory Outlets
Industrial Market Major New Completions Stock (millions sq m) / New Supply ( 000 sq m) Logistics Park Region Size (sq m) Prologis Park Prague - Jirny Greater Prague 31,700 Prologis Park Prague Airport Greater Prague 30,000 CTPark Nový Jičín Moravia - Silesia 8,600 During Q2 2015, the total volume of new completions reached nearly 100,000 sq m. Over 95% of the space was delivered on a pre-let basis. Another 500,000 sq m is currently under construction, the highest level since 2009. More than 86% of that space is being built for a secured tenant. 2014 5.1 387 Existing stock New Supply Q2 2014 4.85 125 Q2 2015 5.26 99 Under Construction (sq m) to be completed in 2015/Q1 2016 350,000 Prime Rents ( /sq m/month) Prague 3.80-4.25 Demand (sq m) 120,000 29,000 Brno 3.90-4.25 122,000 Absorption 145,600 (sq m) Pilsen 3.60-4.20 261,000 Q3 2015 Q4 2015 Q1 2016 Renegs / Renewals Net Take-up Major New Transactions Vacancy CR average 6.9 % Tenant Property Size (sq m) Sector Globus Prologis Park Prague Jirny 29,200 Retail Confidential CTPark Zákupy 18,600 Producer Hisense CTPark Plzeň 15,000 Producer Borges Prologis Park Prague - Štěnovice 12,000 Producer Confidential Logistické centrum Lipovka 11,800 Producer 8.7% 0% 7.9% 2.7% 15.9% 6.9% 14.3% 1.8% 38.1% 6.6% 13.5% 0% 6.6%
Tewfik Sabongui Managing Director +420 224 234 809 tewfik.sabongui@eu.jll.com Ondřej Novotný Head of Research +420 224 234 809 ondrej.novotny@eu.jll.com Featured Research: Czech Industrial Market Q2 2015 Prague Office Market Q2 2015 Prague Residential Market 2014 CEE Investment Market Pulse H1 2015 Made in Czech 2015 www.jll.cz COPYRIGHT JONES LANG LASALLE IP, INC. 2015. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.