In Q4 last year, transactions totalled around €740 million, the highest quarterly volume since Q1 2022. Czech capital remained the dominant source of investment, accounting for 86% of transactions in Q4. Czech investors were active in all five major real estate sectors and pursued the acquisition of assets in other CEE markets. In terms of asset classes, retail led the way in Q4 with 53% of the total volume, followed by offices with 30% and hotels with 11%. 

Among the most significant transactions in the fourth quarter was the sale of 16 properties from the Nova Real Estate fund to Redside and then to the ownership of ČMN. This portfolio consisted of Prague office buildings and small to mid-sized retail assets in the Czech regions. It represented the largest transaction of the quarter. Another transaction of note was the sale of a 25% stake in Centrum Černý Most in Prague 9 which was acquired by RSJ and Upvest. The seller, Unibail Rodamco Westfield, retained a majority share. Transaction activity in the premium prime market was relatively low. Most transactions completed involved investors looking for Core+, Value-Add and Opportunistic products

"Overall, commercial real estate investment in 2024 reached €1.8 billion, which exceeded our original estimates and represented a 57% improvement on 2023. This volume is comparable to investment levels in 2021 and 2022, indicating that the investment cycle is likely already bottoming out," says Josef Stanko, Head of Market Research at Colliers. 

Retail sales enjoyed considerable investor interest, attracting 41% of invested capital. The office sector followed with 25% of the market share. This was boosted by the sale of offices from the Nova real estate fund and a significant transaction from the beginning of the year when the Prague City Council acquired a 40,000 sqm building in the city centre for its use for approximately €140 million.

Investments in the residential rental property sector also showed stable growth. They accounted for 14% of market volume. This is a relatively new asset class and its early investors are keen to expand their portfolios. In 2024, REICO entered this market with the acquisition of the Nový Opatov residential project in Prague 4. Other major investors such as AFI Europe, Mint and the Archbishopric of Prague have also made new acquisitions. AFI Europe is currently the largest landlord in this sector in Prague, owning nearly 900 rental apartments.

The hotel segment also saw an increase in activity in 2024. Although hotels accounted for only 8% of investment volume during last year, in terms of capital value this was four to five times higher than in each of the previous three years.

Investment in the Czech industrial property sector accounted for just 9% of overall volume. This is because finding good industrial opportunities remains challenging. Around 50% of modern warehouses are held by long-term owners such as CTP and Accolade, who rarely sell.

"After a period of rising yields in 2022 and 2023, prime yields stabilised in 2024. Plus, the market found new price equilibrium," says Josef Stanko, adding that the current market situation is boosting investors' confidence in their forecasts for financing and future property returns.

Currently, yields on prime office properties are 5.50%, while yields on prime industrial properties are slightly lower at 5.25%. In the retail submarkets, prime shopping centre properties are yielding 4.50%, shopping centre properties are yielding 6.00% and prime retail parks are yielding 6.25%.

With several large transactions from the end of 2024 up for completion in 2025, this year will get off to a strong start; thus resulting in a significant increase in annual investment volume. As a result, the volume of transactions by the end of the year could exceed the €1.8 billion recorded in 2024. In addition, the flow of transactions may be boosted, for example, by a reduction in the cost of debt financing as a result of the ECB cutting rates to 2.75% in February 2025.