European Outlook 2024: The Tide is Turning

Unlock the Future of Real Estate

Looking ahead to 2025, the Czech real estate market will see important changes. Our latest report, "Czech Republic Outlook 2025," provides key insights and trends to help you understand the market.

Investment Market 

Transaction volumes are stabilising, and prices are levelling off after sharp declines and interest rate changes. Investors are focusing more on operational real estate, especially in the living sector, rather than offices. This trend is expected to grow in 2025. Prime yields should stay stable until the end of the year but yields on secondary assets might continue to rise. 

Prague Office Market 

Quality is crucial for achieving premium office rents. Modern units will become harder to find, and many large requirements may take longer to complete. The future of older buildings is uncertain, as they are hard to adapt and may need to be repurposed. Despite high demand for prime office space and limited construction, average rental growth in Prague is expected to slow down next year. 

Industrial Market 

Demand for logistics space remains strong, but leasing activity has softened slightly due to weaker economic conditions. The reorientation of supply chains continues to drive interest in the Czech market. For 2025, we expect prime rents to stay stable, maintaining the same levels seen during the pandemic. This stability is supported by strong demand and limited space availability. 

Retail Market 

Consumer confidence hit its lowest point in late 2022 and is slowly recovering. Discounters will continue to benefit, but the midmarket segment will recover slowly. The revival of tourism is driving growth in the luxury sector, as its consumer base is less affected by rising prices. We expect moderate growth in High Street rents in Prague next year, with Shopping Centre rents also likely to increase. 

Hotel Market 

Prague hotels are showing strong performance growth in Europe this year, with an 11% RevPAR increase (YTD Sep 2024). This is likely to continue in 2025, but at a slower pace. The hotel supply growth remains limited, except in the luxury class, which will see 320 additional rooms by the end of 2025. Even with this, the luxury market in Prague will remain undersupplied, representing only 2.8% of the total supply. Demand in 2025 is expected to surpass 2019 levels by over 16%, driven by the return of visitors from Asia and stronger air connections.

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