Property Market
The Industrial Real Estate and Warehouse Market
The industrial real estate market in the Czech Republic has experienced stable growth over the past few years. Demand for industrial space has expanded in the past two years from Prague to other areas such as Plzen, Brno and, most recently, Ostrava. We expect further growth in take-up throughout the Czech Republic in the short term and further growth in the take-up share of locations outside the capital. Total stock of modern developer-led logistics and industrial space amounted to 2,983,240 sq m at the end of 2008. New supply in the second half of 2008 reached almost 340,000 sq m, resulting in a total new supply in 2008 of 641,900 sq m. Total take-up reached 716,700 sq m for the whole year of 2008 which represents a 28% decrease compared to 2007. The highest take-up was recorded in Greater Prague (391,000 sq m), followed by West Bohemia (95,000 sq m) and North–East Bohemia (70,600 sq m).
Regional Markets
New developers are entering the Czech market and will increase competition particularly within regional markets. In the future, the choice of location will need to be more carefully examined particularly with regard to labour availability and transport connections.
Major completions in the second half of 2008 included ProLogis Park Ostrava (69,800 m2), VGP Park Horní Počernice (41,000 m2) and D5 Logistics Park (32,500 m2) in Q3, and Starzone Pardubice (27,600 m2), Panattoni Park Prague Airport (14,107 m2), VGP Park Hradec Králové (13,275 m2), Tulipan Logistics Park (26,700 m2) and Západní zóna Bezděčín Mladá Boleslav (16,220 m2) in Q4 2008.
Source: CzechInvest, 2008
The overall national vacancy rate increased to 16.9% at the end of Q2 2009 compared to 16% in Q1 2009. The highest vacancy rates of modern newly developed warehouse space are recorded in Moravia–Silesia (32%) and West Bohemia (26.8%). The vacancy rate in Greater Prague slightly decreased from 15.5% and currently stands at 15.2%.
Industrial Zones
The most attractive option for investors wanting to occupy suitable premises is to build facilities in one of the many industrial zones that have been completed or are currently under development. These zones offer land with infrastructure and are often prepared with the support of various state programmes and in cooperation with local authorities.
Since 1998, support for establishment or further development has been distributed to a total of 100 industrial zones, the greatest number of which are in the Ústí, Central Bohemia and Moravia-Silesia regions. Financing is currently being focused on additional work in the large Nošovice, Mošnov, Kvasiny, Holešov and Triangle strategic industrial zones.
A total of CZK 9.184 billion has been distributed to individual zones from these programmes. Thanks to this support, 3,129 hectares of industrial zones were developed, in which 606 companies hitherto have invested CZK 210 billion and created 103,054 jobs.
For the programming period 2007-2013, CzechInvest, in cooperation with the Ministry of Industry and Trade, will introduce the Real Estate Programme financed from EU structural funds, which is built on the experience gained through the previous such program conducted from 2004 to 2006
The aim of the Real Estate Programme is to encourage the creation and development of business properties including infrastructure and to contribute to the improvement of the investment climate and environment of the Czech Republic. In order to achieve this aim, this program will involve several types of projects, which can be financially supported using European funds and the state budget. Supported projects will include preparation of industrial zones and their further development, relocation of companies and construction of rental buildings. However, the primary focus will be on brownfield regeneration, including renovation of buildings and regeneration of disused sites.
The programme is open to almost all types of enterprises, with the exception of multinational companies. The main restrictions concern users of supported real estate, which should be mainly SMEs operating in the manufacturing industry.
