Boston, MA -- (SBWIRE) -- 03/31/2014 -- The scene is set for the beginnings of a recovery in the Czech Republic commercial real estate market in 2014 with an improving macro-economic backdrop expected to help boost demand for real estate space across the country's major urban centres. At the same time, we caution that a number of headwinds, such as high supply and vacancy rates, are expected to persist over the course of the year. The Czech Republic Q1 2014 Real Estate report examines the commercial office, retail, industrial and construction segments. Despite the sector's recent travails, the Czech Republic still represents an attractive and strategic long-term investment avenue for the global real estate investors, based on its geographical location, coupled with rising income levels and living standards.

With a focus on the three principal cities of Prague, Plzen and Brno, we consider how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of government austerity on a market where cash flow is already restricted. The key growth areas driven by increasing activity on the part of international investors, and the potential of the domestic consumer market, are also explored with corporate growth strategies looking to the country for expansionary opportunities.

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In spite of the relative optimism surrounding the sector going into 2014, the commercial real estate market is set to face many of the same problems as seen over 2012-2013: high vacancy levels, stagnant rental rates and a poor construction pipelines. However, the risks are set to be less severe as balance sheets for consumers and businesses have improved and extra liquidity in the market place should induce more transactions and reduce market associated risks.

Recent Developments:

- In January 2014, it was reported that Europe-based property company Immofinanz Group had acquired an operational commercial parks in the Czech Republic. The park, which is located in Kladno, was sold by Strasser Immobilien Group. Tenants at the properties include JYSK, Muller, Takko and Deichmann. The completely rented retail park is to be rebranded during H114 by the group.
- Swedish real estate developer Skanska is reported to developing 24,000 m2 of office stock in the capital, which will be located in the premium districts 4, 5 and 8.
- International retailer Amazon has announced plans to open two distribution centres in the country in 2014, which will be located near the cities of Prague and Brno. The centres will add to the company's network of 25 facilities, which are located across seven European countries. Each of the centres will measure about 95,000m2 in area.

BMI Forecasts:

- The retail segment will continue to outperform both office and industrial real estate sectors in terms of rental rates. Prague will retain the highest maximum rent levels at US$157.50/m2 per month

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