Residential construction in Czech Republic declines, Prague bucks the trend

Residential construction across the Czech Republic continues to decline, with fewer flats being built and completed compared to last year, according to new data from the Czech Statistical Office (ČSÚ)). The downturn, evident in most regions, contrasts with Prague, where construction activity is on the rise and flat sales are increasing. Despite this uptick, experts warn that housing affordability in the capital remains a critical issue.

In August, construction output across the country increased by just 0.4%, with a notable drop in civil engineering projects, including apartment buildings and offices, which fell by 2.3% year-on-year.

“Prague is experiencing a surge in construction, with nearly 5,000 new flats started this year, marking a nearly 50% increase compared to the same period last year. However, it remains the most undersupplied and expensive market in the Czech Republic, exacerbating housing affordability,” said Petr Dufek, an economist at Banka Creditas. Dufek also noted that while Prague’s boom might spread to other regions, construction challenges could still hinder progress.

According to the CSO, 2,753 flats were started nationwide in August, an 11.3% decrease from the same month in 2022. The number of completed flats also fell by roughly 20%, reaching 2,238 in August. Since the beginning of the year, the overall decline in flat construction has been less severe at around 6%.

Jan Vejmělek, an economist at Komerční banka, attributed the decline to weaker construction in family houses, which dropped by nearly 25% year-on-year, while the number of completed flats in apartment buildings fell by a smaller 1.5%.

In contrast to the national trend, the Prague market is seeing a recovery in sales. “In the first half of this year, 3,500 new flats were sold in the capital, a year-on-year doubling,” said Michaela Vaňková, executive director of the Central Group development company. She added that deferred demand and supply, particularly projects that were economically unfeasible over the past two years, are now returning to the market. Additionally, the rise in flat sales has been supported by a record increase in the number of mortgages granted.

Alongside new developments, interest in property renovations is also expected to grow. According to Ondřej Boreš, public affairs manager at Velux, many flats and houses across the country are outdated, with the average age exceeding 40 years. Boreš believes that current adjustments to subsidy programs focused on sustainability and energy efficiency could help drive the reconstruction of older properties.

However, the broader outlook for the housing construction sector remains uncertain. Fingood’s chief operating officer, Ondrej Kozel, warned that expensive financing continues to weigh heavily on developers. “Higher interest rates, coupled with stricter bank requirements for guarantees, are making it increasingly difficult to finance new projects,” Kozel said, adding that builders are now seeking alternative methods to fund construction.

The housing sector, particularly outside Prague, could face stagnation this year unless financing conditions improve, experts suggest.

Source: CTK

Apartment prices in Czech Republic surge, qverage exceeds CZK 100,000 per sqm for first time

Apartment prices in the Czech Republic continued their upward trajectory in the second quarter of 2024, rising by 2.4% quarter-on-quarter to an average of CZK 101,700 per square metre, according to a Deloitte analysis. While the growth pace slowed slightly by 1.6 percentage points compared to the first quarter, it marked the third consecutive quarter of rising prices. Notably, the average selling price of flats surpassed CZK 100,000 per square metre for the first time.

Price increases were recorded in 12 regions, with the sharpest rises in the Pilsen and Pardubice regions. Meanwhile, the Karlovy Vary Region saw the largest price decline. Petr Hána, a real estate market expert at Deloitte, pointed to rising prices in major cities like Prague and Brno as the driving factors. “The growth trend, which began with lower interest rates, falling inflation, and reduced energy costs, is continuing. Increased demand is inevitably pushing flat prices higher,” Hána said.

In Prague, flat prices rose by 5.7% quarter-on-quarter, reaching CZK 132,000 per square metre. The steepest rise was in Prague 7, where prices jumped by 14% to CZK 146,400 per square metre. On the other hand, Prague 1 experienced a 12% decline, though it remains the city’s most expensive district, with an average price of CZK 172,700 per square metre.

The South Moravian Region saw prices increase by 2.5% to CZK 104,500 per square metre, while the Central Bohemian Region recorded a 5.1% rise to CZK 83,100 per square metre. The Ústí nad Labem Region remains the most affordable, with prices increasing by 4.2% to CZK 34,900 per square metre. The Karlovy Vary Region saw further declines, with prices dropping 4.4% to CZK 44,300 per square metre. Flats in the Moravian-Silesian Region rose 6.7% to CZK 47,700 per square metre.

A total of 7,182 flats were sold nationwide in the second quarter, with 3,208 in new buildings. Prefabricated houses accounted for 2,226 sales, and 1,748 flats were sold in brick buildings. Despite the growing demand, Hána highlighted a pressing issue: insufficient new construction. “We are building far fewer flats than needed. Without significant changes, the market will likely continue on its current path,” he warned.

Source: CTK and Deloitte

Trei Real Estate begins construction of 140-unit residential development in Düsseldorf

Trei Real Estate GmbH, an international developer and asset manager, has commenced construction on a new residential quarter in the Mörsenbroich district of Düsseldorf. The project, located on Robert-Stolz-Strasse, will feature two residential buildings offering a total of 140 apartments and approximately 8,000 square metres of living space. The development, which replaces an outdated office and residential building currently on the site, is slated for completion in 2027, with a total investment of 59 million euros.

Pepijn Morshuis, CEO of Trei, highlighted the importance of the project: “Our focus in Germany is on urban densification, with a strong emphasis on sustainable construction and the creation of green spaces. This new residential quarter will provide much-needed housing for families, seniors, and singles, while also improving the liveability of the city through a landscaped inner courtyard designed to be a welcoming space for residents.”

The development’s green courtyard, complete with a playground and seating areas, will serve as the centrepiece of the project. Many of the one- to four-bedroom apartments will have views of this inviting space. The complex will also include an underground car park with 84 spaces reserved for tenants.

Mörsenbroich, located just four kilometres northeast of Düsseldorf’s city centre, is well connected by public transport and boasts a quiet, green atmosphere despite its status as a transportation hub. The district is also home to a variety of amenities, including supermarkets, schools, preschools, and sports clubs, making it an attractive area for new residential developments.

The architectural design and integrated planning for the project are being handled by Düsseldorf-based HPP Architekten GmbH, with Nesseler Bau GmbH of Aachen serving as the general contractor.

International Campus opens Wendenquartier residential building in Hamburg’s Hammerbrook district

International Campus Group, a major player in student and urban residential property development, has officially acquired and opened the Wendenquartier apartment complex in Hamburg’s Hammerbrook district. The newly completed development, featuring 700 apartments across two residential formats, THE FIZZ and HAVENS LIVING, is designed to meet the city’s growing demand for housing, particularly among students and expatriates.

The 29,000-square-metre site, located at Wendenstrasse 14-16 and Sachsenstrasse 13, boasts a distinctive brick façade typical of Hamburg’s architecture. It includes commercial units on the ground floor, extensive community areas, three roof terraces, lounges, and underground parking facilities for cars and bicycles. The building, which has received LEED Gold certification, highlights its sustainable and future-proof design.

“We are thrilled to have opened Wendenquartier on schedule,” said Gawain Smart, CEO of International Campus Group. “Like other major German cities, Hamburg faces a significant housing shortage, particularly in student and expat accommodation. This multi-brand location adds much-needed residential units, alleviating some pressure on the housing market. Early leasing success underscores the demand for our housing concepts in Hamburg.”

Benjamin Albrecht, Director of Development at International Campus, emphasized the project’s sustainability and architectural quality. “This centrally located development not only addresses future housing needs but also offers unique community spaces, including roof terraces with views over Hamburg—perfect for relaxation and socializing.”

The Wendenquartier project follows the successful opening of a similar complex in Hamburg’s Altona district, which also features THE FIZZ and HAVENS LIVING formats.

Hammerbrook, where the new development is located, is one of Hamburg’s key business districts, home to around 800 companies and with convenient access to the HafenCity and the city center. The area’s proximity to several universities makes it an ideal location for student housing, especially as enrolment numbers in Hamburg continue to rise.

The property was acquired from the Grundkontor Projekt Group, led by Romeo Uhlmann, with whom International Campus collaborated closely on this development.

Sfinks Polska reports 6.6% revenue growth in Q3 2024, reaching PLN 54.8 million

Sfinks Polska Group, one of Poland’s leading casual dining chains, recorded PLN 54.8 million in revenues from catering sales in the third quarter of 2024, marking a 6.6% year-on-year increase. From January to September 2024, the group’s cumulative catering sales reached PLN 154.3 million, reflecting a 9.2% rise compared to the same period last year.

“The summer season, traditionally a strong period for the restaurant industry, paid off for us again this year,” said Sylwester Cacek, President of Sfinks Polska. He highlighted new restaurant openings, such as the Sphinx in Rzeszów and two locations, The Burgers and Sphinx in Poznań, which contributed to the company’s growth. “We expect their full sales potential to be realized in the fourth quarter,” Cacek added.

However, he noted that September fell slightly short of expectations due to unfavorable weather and the temporary closure of several restaurants for reasons beyond the company’s control. Despite these challenges, the company’s catering network continued to generate higher revenues, both for the third quarter and the year-to-date.

Sales from comparable premises, operating at the end of each month in both the current and previous year’s third quarter, amounted to PLN 51.02 million, a 5.8% increase compared to PLN 48.23 million in Q3 2023. From January to September 2024, sales at these comparable premises reached PLN 143.41 million, up 8.8% year-on-year.

Sfinks Polska’s restaurant portfolio includes both owned and franchised locations, with a total of 76 outlets operating under various brands, excluding the Piwiarnia network, at the end of Q3 2024. Franchisees pay a fee based on sales generated at franchised restaurants, while sales from company-owned locations contribute directly to the group’s revenues.

Sfinks Polska remains the largest casual dining chain in Poland by sales volume and number of restaurants. It is also ranked as the third-largest restaurant chain in the country by revenue. The company has been listed on the Warsaw Stock Exchange (WSE) since 2006.

Source: Sfinks Polska and ISBnews

Middle East tensions weaken Polish zloty, analysts report

The ongoing geopolitical tensions in the Middle East have driven investors away from riskier assets, leading to a weakening of the Polish zloty (PLN). Analysts at Ebury, including Enrique Díaz-Alvarez, Matthew Ryan, Roman Ziruk, and Michał Jóźwiak, reported that the zloty depreciated by almost 1% against the euro (EUR) over the past week. However, despite the decline, the EUR/PLN exchange rate remains only slightly above 4.30.

The zloty’s downturn follows a difficult week for currencies across the region. Rising tensions in the Middle East caused a flight to safer assets, benefiting the U.S. dollar (USD) in particular. Ebury’s analysts noted that the strong performance of the USD was driven not only by geopolitical factors but also by a robust U.S. jobs report, which exceeded market expectations.

Key Factors Driving the Zloty’s Weakness:

1. Geopolitical concerns in the Middle East prompted investors to flee risky assets.
2. A stronger-than-expected U.S. non-farm payrolls (NFP) report bolstered the USD.
3. The combination of these factors put downward pressure on the zloty.

In addition to the Middle East tensions, the U.S. dollar strengthened against other G10 currencies, while the British pound (GBP) faced a slight decline after dovish comments from Bank of England Governor Andrew Bailey. Despite these movements, Latin American currencies, particularly the Mexican peso, benefited from rising oil prices and distance from the geopolitical unrest.

Focus on Inflation and Interest Rates
Looking ahead, inflation data will be closely watched. On Thursday (10.10), the U.S. Consumer Price Index (CPI) report for September will be released, which could influence the Federal Reserve’s decision on interest rates at its November meeting. Markets are currently expecting a 25 basis point (bp) rate cut, but the inflation report could sway expectations. Investors will also be monitoring eurozone retail sales and UK GDP data, though these are not expected to significantly impact markets.

Polish Zloty Struggles Amid Global Uncertainty
Last week proved challenging for emerging market currencies, including the zloty. The Polish currency fared worse than most, except for the Hungarian forint and South Korean won. External factors, particularly the risk-averse sentiment due to the Middle East crisis and shifts in U.S. interest rate expectations, have been key contributors to the zloty’s weakness. Despite this, the EUR/PLN exchange rate remains relatively stable at just over 4.30.

Domestically, the National Bank of Poland (NBP) held interest rates steady. NBP President Adam Glapiński’s press conference, following the decision, took on a more dovish tone, even as inflation rose to 4.9% in September. Analysts suggest the central bank may lean towards a rate cut in the coming months, though significant uncertainty remains.

Eurozone and U.S. Economies Show Diverging Paths
The eurozone saw another low inflation reading last week, reinforcing expectations that the European Central Bank (ECB) may cut rates at its next meeting on October 17. Markets are anticipating a series of rate cuts through 2025, though analysts caution that further deterioration in economic activity could speed up the pace of easing.

In contrast, the U.S. economy appears to be on a stronger footing. The September NFP report exceeded expectations in terms of job growth, wage increases, and lower unemployment, boosting confidence that the Federal Reserve may achieve a “soft landing” for the economy, reducing inflation without triggering a recession. This scenario has strengthened the dollar and raised the likelihood of a gradual loosening of monetary policy.

British Pound Faces Temporary Setback
The British pound’s two-year appreciation slowed last week after Bank of England Governor Andrew Bailey suggested that the central bank might cut interest rates more aggressively if inflation continues to decline. Although this caused a temporary dip in the pound, analysts believe Bailey’s comments were more of a warning than a signal of immediate action.

Despite the short-term decline, the pound remains the best-performing G10 currency of the year. August GDP data, due on Friday (11.10), is expected to show that demand in the UK remains relatively resilient compared to the eurozone, which could help the pound recover unless overshadowed by developments in the Middle East.

As geopolitical tensions and economic data continue to unfold, currencies, particularly in emerging markets, remain vulnerable to shifts in investor sentiment. The zloty’s performance, along with other currencies, will likely hinge on the evolving global landscape.

Source: Ebury and ISBnews

6.7 Million Attend Munich’s Oktoberfest, Fewer Than Last Year

The Munich Oktoberfest wrapped up its 16-day celebration today, drawing 6.7 million visitors, according to preliminary figures released by festival organizers. Attendance was down from last year, when 7.2 million people attended the festival, which ran for two extra days. This year’s visitors consumed approximately seven million liters of beer, slightly less than the previous year.

“Oktoberfest was particularly relaxed this year,” said festival chief Clemens Baumgärtner. He noted that despite the large crowd, there were fewer crimes and medical emergencies compared to previous years. Police reported a 25% decrease in crime, while health officials registered nearly 30% fewer patients requiring treatment.

The festival took place under heightened security measures following a terror attack in Solingen in August, in which a Syrian asylum seeker killed three people and injured eight others. Additionally, just before the start of Oktoberfest, an Islamist attacker from Austria targeted the Israeli Consulate General and Munich’s Documentation Centre for the History of Nazism. In response, Bavarian authorities introduced random entry checks, including metal detector searches. A force of 600 police officers and 2,000 private security personnel ensured the safety of festivalgoers. Fortunately, no major incidents were reported.

Oktoberfest continued to draw a global audience, with tourists flocking in from the U.S., Italy, Britain, Austria, Poland, France, and for the first time, a significant number of visitors from India.

Though the festival saw fewer visitors this year, organizers attribute the decline partly to weather conditions. The first week of Oktoberfest was sunny and warm, while the second week saw cooler temperatures and heavy rain. This year also marked the first time beer prices crossed the EUR 15 mark, with a glass costing between EUR 13.60 and EUR 15.30 (CZK 341 to 384). Despite the price hike, consumption of non-alcoholic beer remained at four to five percent of total beer sales, while food consumption rose by nine percent.

A notable aspect of this year’s festival was the reduction in thefts of the traditional Oktoberfest mugs, or “tuplas.” Security managed to prevent the theft of 98,000 mugs, compared to 115,600 last year.

Unlike previous years, this edition of Oktoberfest did not feature a standout musical hit. Last year, the crowd’s favorite was the Italian song Sará perché ti amo by Ricchi e Poveri. This year, the most frequently played songs were Taylor Swift’s Shake It Off and Coldplay’s Viva La Vida.

The festival’s lost-and-found department had its hands full, recovering 700 wallets, 500 IDs, 315 mobile phones, 450 credit cards, and 150 sets of keys, along with unusual items such as five wedding rings and a pair of metal handcuffs.

The Oktoberfest tradition dates back to 1810, when Crown Prince Ludwig of Bavaria and his bride, Princess Therese of Saxony-Hildburghausen, celebrated their marriage with a horse race in a meadow outside Munich. The event was such a success that it became an annual festival. Even after its start was moved to September for better weather, the event retained its original name. This year marked the 189th edition of the world-famous beer festival.

Source: CTK

KRUK S.A. leases 6,000 sqm in Wroclaw’s B10 complex

KRUK S.A., a European debt management firm, has secured 6,000 square meters of office space in the newly developed B10 office-hotel complex in Wroclaw, owned by Vastint Poland. The leasing process and office fit-out were facilitated by consulting firm Walter Herz, which provided comprehensive support to KRUK throughout the transaction.

Tomasz Ignaczak, General Director of KRUK S.A., highlighted the need for workplace optimization and improved standards as key factors in choosing the B10 complex. “We sought a space that encourages team collaboration while offering comfortable conditions for working with clients and partners. B10’s location, high-standard facilities, and ESG-compliant certification made it the ideal choice,” said Ignaczak.

KRUK, founded in Wroclaw in 1998, is a leader in debt management across seven European countries. The company’s move to B10 aligns with its continued growth and focus on creating modern, functional workspaces for its team.

Vastint Poland’s Senior Leasing Manager, Marek Ulanecki, expressed satisfaction with the partnership. “B10 attracts top companies with its state-of-the-art amenities. We are delighted that KRUK has chosen our complex and hope their new office supports their future success.”

Walter Herz played a critical role in the leasing process. According to Mateusz Strzelecki, Partner/Head of Tenant Representation at Walter Herz, the firm’s involvement included financial and technical analyses, negotiations, and project management. “We aimed to secure an optimal space and eliminate additional costs for KRUK, which we successfully achieved through detailed planning and negotiations.”

The B10 complex, located in Wroclaw’s western business district, offers 20,000 square meters of office and hotel space. Designed with a Scandinavian aesthetic, the six-storey building features modern architecture, LEED v4 Platinum certification, and eco-friendly solutions. The complex includes a hotel, green relaxation areas, and proximity to Magnolia Park shopping center and the Wroclaw Mikolajow train station.

Vastint Poland, part of the Vastint Group, has been active in European real estate for over 30 years, specializing in office, residential, and hotel development.

Develia sells 2,700 units in first three quarters of 2024, exceeding previous year’s record

Develia has reported the sale of 2,700 units in the first three quarters of 2024, marking a 31% increase compared to the same period last year, which was already a record year for the developer. By the end of September, Develia had handed over 1,798 units, a 39% rise from the 1,298 units delivered in 2023.

The company’s sales included 59 units from joint projects with Grupo Lar Polska. In the third quarter alone, Develia sold 751 units, down from 875 in Q3 2023, but remained on track to meet its annual sales target of 2,900 to 3,100 units.

“We are pleased with our performance despite the challenging market conditions and expect to meet or exceed our target,” said Andrzej Oślizło, President of Develia. “In the coming months, we’ll focus on housing handovers and preparing an attractive offer for 2025.”

The Centralna Park and City Vibe projects in Kraków and Bemosphere in Warsaw were among the top sellers in Q3. Develia handed over 741 units between July and September, a 17% increase from the same period last year. With a large number of handovers scheduled for Q4, Develia expects a strong year-end boost to its 2024 results.

Photo: Rokokowa Vita, Develia

P3 promotes Jan Andrus to Head of Leasing and Business Development in the Czech Republic

P3 Logistic Parks has promoted Jan Andrus to Head of Leasing and Business Development for the Czech Republic, reinforcing the company’s dedication to enhancing client service and expanding its market presence. Andrus, who has led the leasing department for the past three years, will now also oversee business development and the identification of new opportunities.

“This promotion reflects our focus on delivering strategic real estate solutions that foster long-term client success,” said Peter Jánoši, Managing Director of P3 Czech Republic and Slovakia. “Jan’s leadership and vision make him the ideal person to lead both leasing and business growth in the Czech Republic.”

With over a decade of experience at P3 Logistic Parks, Andrus has played a pivotal role in managing the company’s leasing activities in the Czech market. His expanded role now includes overseeing speculative developments and spearheading business initiatives, with a focus on addressing client needs and offering customized solutions.

“I’m excited to take on this new role and continue contributing to P3’s growth,” said Andrus. “Our priority remains understanding client requirements and delivering solutions that help them reach their business goals.”

Andrus began his career in logistics and industrial real estate at P3, drawing on previous experience in residential and retail projects. His expertise will be key as the company continues to grow its portfolio of showrooms and sales warehouses.

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