Pooling information from its well-established presence in China and the rest of Asia,  Savills has combined this with its on-the-ground experience in the Czech Republic to provide broad preliminary observations of the current and possible future impacts of this crisis on the local real estate market.

Some key observations and forecasts include:

• Manufacturing: Lessons learned from the coronavirus outbreak could accelerate the introduction of automation to the manufacturing sector making it less labour dependent. Partial return of production to Europe could also be seen in the coming years.
• Logistics: Increased online retail sales are putting the distribution network and last-mile deliveries under pressure. If increased online sales endure after the crisis, e-commerce providers will look to expand warehousing capacity, enhancing leasing activity on the industrial market.
• Retail: Enforced online shopping could accelerate the long-term behavioural shift to e-commerce. Increased investment in online retail platforms is also being witnessed. Post-crisis, landlords are expected to pay more attention to the financial health of tenants.
• Office: Construction works are likely to see slight delays due to short-term labour shortages and social distancing measures. Some new developments will be postponed or put on hold and landlords are expected to focus mainly on lease renewals to secure tenants and stabilise cash flows. Rent levels are forecast to remain stable at best with certainly no anticipated growth in the foreseeable future or even mid-term.
• Residential: Under the current restrictions, apartment sales are impossible to conclude. Due to the nature of the product, the residential market is not so volatile, therefore the activity decline is expected to be short-lived and not very dramatic although a price correction could be expected due to tightening debt and general uncertainty.
• Investment: Sharp contraction in investor activity is apparent. Though expected to pick up in H2 2020, overall annual investment volumes will certainly be lower and will not reach the predicted volumes. Going forward, investors will pay more attention to running and analyzing credit checks on tenants across all real estate sectors and many transactions will shift into 2021.

Lenka Oleksiaková, Senior Research Analyst, Savills CZ&SK, comments: “The leasing and investment activity in most commercial real estate sectors in the Czech Republic is currently almost at a standstill. Without doubt, the learnings and experience gained from this ‘global exercise’ will change the way that companies operate and plan their growth, and also how all parties will behave in the immediate future. Naturally, these changes will, directly and indirectly, influence the real estate market, some sooner than others. But the extent and timing of such changes is impossible to outline at this point in time."