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BNP PARIBAS REAL ESTATE GUIDE TO INVESTING IN CZECH ... · PDF file 4 INVESTING IN CZECH REPUBLIC – 2018 BNP Paribas Real Estate BNP Paribas Real Estate 2018 – INVESTING IN CZECH

Jun 25, 2020

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  • Real Estate for a changing

    world

    BNP PARIBAS REAL ESTATE GUIDE TO

    INVESTING IN CZECH REPUBLIC 2018

  • DO YOU KNOW.. .

    PRaGUE IS THE SIxTH RICHEST dISTRICT IN EU

    As Eurostat stated, in Prague the regional GDP per capita, expressed in terms of

    purchasing power standards, achieves 178% of the European Union average. Prague joined the top 10 regions a decade ago,

    and since that time has been overcoming contesters step by step, which resulted in 6th

    position among 276 EU regions in 2016.

    Skoda CoNqUERS NEw maRkETS Skoda is one of the longest-standing

    carmakers in the world. The iconic Czech brand has been a part of the world leader Volkswagen Group since 1991. In terms

    of cars sold, in 2017 Skoda captured 4.5% market share in the entire EU & EFTA region. It means that Skoda was more popular than

    i. a. Toyota, Citroen, Hyundai, KIA, SEAT, Volvo, Suzuki and Honda in 2017.

    BUSTLING HIGH STREET CLUSTER Prague has the best high street in the CEE region. In the historical heart of

    the city, just one step off the Old Town Square, along a quiet Parizska street, you can find numerous premium and luxury world renowned brands such as Cartier, Louis Vuitton, Jimmy Choo, Tiffany&Co.,

    Hermes, Prada, Salvatore Ferragamo and Fendi among others. While mass market retailers occupy more busy Na Prikope

    and Vaclavske Namesti street.

    dIGITaL SoCIETy Internet penetration in the Czech Republic is very high and exceeded 92% in 2016. Around 6.3 million of internet users are e-shoppers. These e-shoppers on average spend €681

    per year. Online purchases generate around 2.5% of country’s GDP, with surges of the

    e-commerce volume by approx. 20% y-o-y over the course of the last three years.

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    RECoRdS IN ToURISm A record number of guests

    accommodated in Czech hotels in 2017 (20 million), up by 9.1% year on year. The tourist offer of the country is not limited to well-known Prague. Czech Republic is the most castle-rich country (over 200) in Europe and it is worth to leave the

    capital and feel charm of other regions.

  • BNP Paribas Real EstateINVESTING IN CZECH REPUBLIC – 20184 2018 – INVESTING IN CZECH REPUBLICBNP Paribas Real Estate 5

    Jihlava

    Ústí nad Labem

    Hradec Králové

    Pardubice

    Olomouc

    Zlín

    Karlovy Vary

    České Budějovice

    Liberec

    PRAGUE

    BRNO

    OSTRAVA PLZEŇ

    F o r e w o r d

    1. Czech Statistical Office / 2. BNP Paribas Real Estate / 3. Ministry of Education / 4. 2015 - Czech National Bank / 5. ABSL

    PRoPERTy maRkET2

    311,367 students studying at 66 universities3

    4.2m m2 offiCE 3.45m m2 rEtAil 7.1m m2 wArEhoUsE

    inhAbitAnts1 EU fUNdS (2014-2020 bUdgEt)

    €23.95bn

    PoPULaTIoN1

    10.6m inhabitants

    STEWART ThOmSON, mRICS Country head for Czech republic bnP Paribas real Estate

    T he Czech republic reports strong economic growth supported by robust domestic demand. It is perceived as a stable and mature market with low investment risk. Czech still provides a pricing spread

    to Western European markets and rental growth prospects support the recent yield compression.

    In the Czech Republic the total real estate investment volumes compared to the size of the country show the highest ratio in CEE. Unlike its peers in CEE, it has a deep and active pool of domestic investors which in turn support a further inflow of foreign equity fuelled by the liquidity brought by local buyers.

    CzECh REPUBLIC by numbers

    GDP Growth in 20171

    4.5%

    220 (10% up y-o-y) Number of employees in BPOs, SSC: 89,000 (19% up y-o-y)5

    number of business Process outsourcinG anD shareD services centres in the czech rePublic

    INVESTmENT GRadE Standard & Poor’s: AA- Moody’s: A1 Fitch: A+

    INfLow of fdI4

    €107.1bn

    1 city with population above 400k inhabitants(Prague)

    1 city with population 100-200k inhabitants (Plzeň) 2 cities with population 200-400k inhabitants (Brno, Ostrava)

  • BNP Paribas Real EstateINVESTING IN CZECH REPUBLIC – 20186 BNP Paribas Real Estate 72018 – INVESTING IN CZECH REPUBLIC CZECH REPUBLIC OVERVIEW

    4 5 6

    1 2 3

    T OP 6 RE A S ONS TO InVesT In CzeCh republIC

    Stable and mature market still offering attractive pricing spread to Western Europe with a unique strategic location in the heart of Europe.

    wELL ESTaBLISHEd PRoPERTy maRkET

    Rental growth prospects in all commercial real estate sectors

    on the back of robust occupier demand.

    wELL SkILLEd LaBoUR The 311,000 students studying at 66 universities, with 77,000

    graduates per year and a strong technical education

    provide an excellent base for investors in high value add sectors such as R&D and IT.

    maTURE INVESTmENT maRkET aNd a HEaLTHy

    fINaNCIaL SECToR Strong domestic investor base and high demand from foreign buyers seeking both low risk

    and capital appreciation. The Czech banking sector is

    healthy and provides attractive lending conditions.

    STRaTEGIC LoCaTIoN aNd wELL dEVELoPEd

    INfRaSTRUCTURE Strategic location in the heart of Europe with great access

    to Western and Eastern markets.

    STaBILITy & HIGH qUaLITy of LIfE &

    SECURITy The Czech Republic is highly

    rated for its stability and security as well as quality of life ranking 6th in the Global

    Peace Index.

    STRoNG fdI INfLow & Low INVESTmENT RISk & PoSITIVE ECoNomIC

    PRoSPECTS The lowest investment risk and

    the highest share of FDI per capita in the CEE supported by prospects of strong economic

    growth well above the EU average.

    COST AND TERmS O V e r V I e w O f C O n s T r u C T I O n , l e T T I n g a n d I n V e s T m e n T C O s T s a n d T e r m s

    Co ns

    tr uC

    ti on

    in VE

    st M

    En t

    lAnd ACqUisition Costs (PEr sqm)1

    Office €6,000-7,000

    Retail €6,000-7,000

    Warehouse €60-100

    ConstrUCtion Costs (PEr sqm)2

    Office €1,200-1,500

    Retail €1,000-1,500

    Warehouse €350-500

    bAnk mArgins 2.00-2.20%

    ltC rAtio 60-80%

    PrimE yiElds4 Office 4.85%

    Retail 4.75% SC 3.50% HS

    Warehouse 5.75%

    PrimE AssEt vAlUEs (PEr sqm)

    Office €3,500-5,000

    Retail €6,000-7,000

    Warehouse €800-1,000

    stAmP dUty Asset/Shares 4%

    bAnk mArgins 1.70-2.20%

    ltv rAtio 60-80%

    stAndArd sAlE fEEs 0.5-2.0%

    LE tt

    in G PrimE rEnts3 Office €19.00-€21.00

    Retail SC €120-€140

    Retail HS €180-€210

    Warehouse €3.80-€4.40

    stAndArd lEAsE tErms

    Office 5 yrs

    Retail SC 5-10 yrs

    Retail HS 5-10 yrs

    Warehouse 5-10 yrs

    AgEnt fEEs Office 12-15%

    Retail SC 12-15%

    Retail HS 12-15%

    Warehouse 12-15%

    *including fit-out 1. Prime location in capital cities. 2. For modern schemes. 3. Prime assets in the capital. 4. Best-in-class schemes in prime

    location within capital city.

  • BNP Paribas Real EstateINVESTING IN CZECH REPUBLIC – 20188 BNP Paribas Real Estate 92018 – INVESTING IN CZECH REPUBLIC CZECH REPUBLIC OVERVIEW

    PraGue GDP Per caPita in PPs reaches 178% of eu averaGe making it the sixth rich- est district in EU. The Czech Republic capital has seen very strong interest both in prime office assets as well as prime high street locations supported by strong rental growth. Given its tourism attractions, the hotel market has been booming attracting investor demand as well.

    CzECh REPUBLIC b I g f O u r

    PRAGUE

    brno has the hiGhest Per caPita number of university stuDents in the country mak- ing it an attractive destination for investments in the IT, R&D and technology sectors.

    ostrava has been unDerGoinG an in- tensive transformation. For investors it provides a deep labour pool from the Ostrava agglomeration. Governmental incentives have attracted numerous investments to the many industrial zones of the region.

    Plzeň anD the Plzeň reGion benefit from close Proximity anD easy connec- tion to Germany which has brought a number of companies seeking links with the German market to the region. This Plzeň region is one of the most sought after logistics hot spots in the country and a major production base mainly in electrical engineering and automotive.

    378,000 Population1

    324,000 Population1

    189,000 Population1

    5.0% Unemployment

    rate1

    6.9% Unemployment

    rate1

    2.2% Unemployment

    rate1

    €1,093 (27,762 CZK) Average gross

    salary1

    €1,024 (26,015 CZK) Average gross

    salary1

    €1,100 (27,944 CZK) Average gross

    salary1

    1. Czech Statistical Office 1. Czech Statistical Office

    1.3m Population1

    2.3% Unemployment rate1

    €1,438 (36,540 CZK)

    Average gross salary1

    office retail warehouse

    Total modern stock (sqm) 3.3m 1.02m 2.68m

    Prime headline rents city centre

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