“You can have the capital, you can have the occupier demand, you can have the land, but ultimately if you don’t have the energy, then that really dictates where you can develop and operate,” said Camila Malzkorn, head of transaction management logistics DACH at Redevco. “It’s a structural bottleneck.”

Demand for power is climbing from several directions at once. Heating is moving off gas, which Europe wants to use less of since Russia’s invasion of Ukraine. Car fleets are going electric, and heavy trucks will follow. Automation, cold storage and AI-guided forklifts all draw more current than the conveyor belts and pickers they replace.

DHL now treats grid capacity as a gate in its site selection. During due diligence on a plot, it files a power request with the municipality. “If we don’t have power, the deal’s off,” said Derk Gillis, director of development and EMEA capital markets at DHL Real Estate Solutions. New DHL buildings are designed with at least two to three truck parking spots wired for 300 kW charging, and the grid connection is sized for that from day one.

CTP points to the Netherlands as the warning for the rest of Europe. “The lack of power basically stops a lot of developments,” said Maarten Otte, chief investment officer of CTP. For manufacturing tenants, energy is already one of the main factors in choosing a location. The developer now describes energy as a third business line alongside its standing portfolio and development pipeline. It is running battery tests in Germany, Amsterdam and Slovakia and plans to put roughly €20 million more into storage over the coming year. “It’s not new, but it’s now starting to become more feasible from a financial perspective,” Otte said, comparing batteries to solar panels a decade ago, when they still needed subsidies to pay back.

The grids themselves remain underinvested. Until that changes, the sites that matter will be the ones with a connection already in place.

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The main thrust of his comment was that current growth is supported above all by demand accumulated in previous years. Construction, however, continues to be held back by persistent, even chronic obstacles that the state should resolve.

While real GDP in 2025 reached 147.7 percent of the 2005 level and construction work prices rose to 169.7 percent, real construction output reached only 107.3 percent. It’s that gap that Zajíček believes the state must zero in on. “As recently as 2024, real construction output had in essence not even reached the level it was at before the financial crisis. Meanwhile the Czech economy grew markedly, and construction work prices grew even faster. The results of one strong year change nothing about that,” said Chamber of Commerce president Zdeněk Zajíček.

He was referring in that last comment to the fact that 2025 was an exceptionally strong year for construction. The value of construction work rose 13.7% y-o-y to CZK 791 billion. Construction output increased by 10.9 percent, of which building construction by 10.5 percent and civil engineering by 11.5 percent.

By contrast, output has been again falling in 2026.

“Last year’s numbers are undoubtedly good,” said Zajíček. “But we should not interpret them as meaning Czech construction has been cured. For the most part, we’re just seeing the realization of demand and projects that accumulated over many years. The weak spot remains the state’s ability to create the conditions for projects to be prepared and permitted faster,” said Zajíček.

While a new construction law appears to be on the horizon, the state still needs to translate the reform into practice. It will have to retain experienced officials and manage their transfer into the new unified building administration. Above all it must finally get the digital tools running that will actually help people and companies.

“Czechia cannot afford more years of waiting,” said the HK ČR president.

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A legal degree never hurts, but how did that help you get going here?
I have a transactional legal background. I’ve been in real estate for more than 10 years and a real estate lawyer since 2019. I was a transactional lawyer and did asset management as well. I find it really helpful to look at the transaction and the whole asset cycle from different perspectives. That’s where a lot of added value comes in. You’re not only looking at what happens during the transaction, but also what happens when you own the building.

It’s very exciting. I love to start really early on the deal because then you help the whole way through. Especially in deals where the transaction insurance makes a huge difference, that’s very rewarding. It’s also just a way for me to go out into the market and get the deal — that’s very satisfying. Especially since we’re the newcomer, with the less-established brand.

It sounds like before you were working on deals that other people brought to you. Now you’re out there, hunting on your own.
Exactly. When I was a transactional or real estate lawyer, I was doing prep work or sitting in meetings with a partner who got the deal. In asset management, we had landlord reps, so it wasn’t us going out. Now it’s me. It’s very satisfying to start from scratch. But it’s not just the transaction. I’m trying to build long-standing relationships with clients so I can help with the whole portfolio. They know they can call anytime. I think that’s very helpful.

Walk me through how a typical deal comes together in transaction insurance.
There are only a couple of options. Either very early on the client knows they want a clean exit, or they need to wind down the company after closing, or there’s some issue they need to secure. They might not want to give a corporate guarantee, so they’re looking for options. If they think of this early on and then I’m involved from the start. If there’s an issue that comes up and we solve it through transactional insurance.

How can insurance speed up a transaction?
Because you know early on that you don’t have to negotiate a lot of things in the SPA. The time limits, the financial limits, the baskets, all of those are usually covered by the insurance. The seller can wind down, and the buyer is okay with that, because they have the insurance company on the other side with a robust process for claims. Usually both sides end up satisfied.

If we come in later in a transaction because of specific risk that can’t be mitigated, that’s where you help overcome deal breakers.

What are the different products you offer?
There’s title insurance that secures your title to shares or real estate, including any identified title risks. Then there’s W&I insurance, warranty and indemnity, which secures the seller’s warranties in the SPA up to a limit. There’s also tax insurance, which secures tax risks above certain thresholds that you might not cover under W&I.

How has title insurance changed over the years?
The product has evolved a lot. It used to be a very formal product you got if there was an issue, so it acted more of a risk management tool, often connected with restitution proceedings. Now it’s more commercially minded. It’s also a financial tool because you save on lawyers’ fees since you don’t have to negotiate the SPA as much. For the seller, they get a clean exit. They can wind down the company rather than keeping the structure for seven years to warrant the fundamental warranties. More broadly, it’s moved on from being a very formal, fairly expensive tool to one that’s not so expensive anymore. We can do smaller deals and it’s more commercially minded.

Do Czech companies and international companies use it to the same degree?
Definitely not. Foreign entities usually use it a lot more. They’re used to it from their home countries. Czech clients know the old product from 10 or 15 years ago, which was expensive and more of a risk management tool. But as a Czech entity that understood the local risks, they usually didn’t need it unless there was a big issue.

Increasingly, Czech clients are going abroad where the other party required it, so they experience what’s essentially a completely new product. The pricing is way down. Once we explain it’s not only risk management but a financial tool, and they use it and find it’s a smooth process, they become more willing to use it again.

Just to be clear, they’re not buying the insurance from you. Explain where Reassurance sits in the food chain.
We’re a broker. We get all the information from the client, like the pricing and the insurance coverage from the insurers, both title and W&I. Then we prepare what we call an MBI report where we show the different options, different pricing, and propose what we feel is the best solution for the transaction. We take into account how the SPA or transaction is structured, what the due diligence findings are, and what both sides require.

How many other brokers are your clients typically talking to?
Usually you have only one insurance broker. The insurance companies have to give the same quote for the same deal. It’s not like they can give Reassurance a quote that’s 10% less than someone else, unless we present a different set of options. Technically you can shop for brokers before they go out and talk to the insurers. It’s not a cutthroat business. We’ll all try to get a deal. But I have to say the competition is very professional. Once you get the mandate, everyone else steps back.

How has the market changed even since you joined three years ago?
When I joined, I knew about five transactions and maybe one was insured, usually for some specific reason like a fund winding down. Now out of five transactions, maybe three are insured. The use of the product has accelerated as it’s become more commercial and more reasonably priced, even for smaller deals.

Which sectors are the busiest for you?
Everybody’s talking about residential, but that’s difficult for transactional insurance because at the end you have individual units. But built-to-rent is new, and we see a lot of BTR and student housing in Poland. I’m waiting to see if that comes here as well.

Poland uses insurance much more than the Czech Republic, partly because they’re much more funded by foreign entities. Here it’s about 90% Czech capital. In Poland it’s like 90% foreign capital. I sometimes see trends coming from Poland to the Czech Republic. In any case, for transactional insurance, it’s really logistics, office, and retail right now.

Do you think this year will be bigger than last, and next year bigger still?
I think it may be. We had a huge year in 2025, but I don’t think we’re slowing down in the next two years. What we saw last year was a lot of smaller deals in the first half and big ones in Q4. Now it’s been pretty consistent throughout the year. Small deals, big deals, mid-sized deals. It’s more of a mix rather than being weighted toward the end. We’ll see what Q4 brings.

Anna Vondrackova is Senior Transaction Advisor for REassurance

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It’s a combination of both. We’ve been trying our best to be active in the market and have been quite successful over the last couple of years.

You do a lot of leasing work as well, but the big transactions are important for the bottom line, and for visibility.
Our advantage compared to some of the bigger competitors is that we also have strong day-to-day business, including the leasing services. We’ve been working for major players in the leasing market for years now. This helps you survive when there’s less investment activity. Even in COVID times, there was a lot of leasing work with all the COVID amendments and leasing work in general since tenants started reducing the size of their offices. The work is always there.

But yes, big transactions are of course important. I usually call them the cherry on top – the kind of thing you put on LinkedIn. They have real added value, though. Everyone knew the Palladium transaction was happening last year, not just people in real estate. Those deals bring you credibility and reputation, which is a good reference for the future. And yes, the big transactions are also commercially rewarding, because they involve an enormous amount of work, including all the due diligence and financing.

The majority of your work is still real estate, then?
We’re seen as a real estate boutique firm, and we don’t fight that perception. I’d say 70 to 80% of our work is real estate related. But real estate transactions are essentially M&A deals — the process, the contracts, the due diligence are the same whether you’re buying an office building or a factory. So, we naturally do M&A work as well. Then there’s a lot that comes from cross-selling, because when a client already trusts you, they come to you with other issues too. So, we’ve done regulatory work, ESG, GDPR, litigation, employment law, etc.

How tough is the competition between legal companies for larger transactions?
It’s been quite intense for many years. We compete against big Magic Circle law firms. It means we can be more competitive on pricing and offer comparable expertise, local knowledge, language skills, and understanding of the environment. And what we can also offer – I’d even say it’s in our DNA – is a commercial attitude.

What do you mean by that?
It means you’re not only sitting in a meeting waiting for the client to ask if something is compliant with this or that provision of law. They expect you to guide them through the whole process from the LOI stage, give them insights about what market practice is, or share your experience with such types of transactions.

You’re basically a partner with them, rather than just a counselor waiting for legal questions and then saying, “it’s not possible because the law says otherwise.” That’s not what the clients want. They want to be protected, in time and without needless hassle. They want you to tell them how to make things possible, not just that they aren’t possible. That’s our approach: to be there as a partner who can share experiences from what we’ve done.

What was significant about the Wood/Satpo deal?

It was the biggest residential transaction of the year, and one of the biggest and most interesting deals of my career. It’s not a standard built-to-rent transaction, which you see every now and then these days. This was different in terms of scale, thanks to a portfolio that consisted of about 760 flats in old panelák buildings.

But beyond that, it has huge development potential. It could bring up to 90,000 sqm of new residential area situated directly on the new Metro D line, which will have a station in the middle of it. It’s unique in Prague in terms of volume, connectivity, and the potential of the whole area.

The deal took over 12 months from the first investment memorandum to closing. There were many players involved, bank financing, and – remarkably – Wood opened a new fund and collected a huge amount of money in a very short time.

What has changed to make BTR deals work now? Developers used to just sell units individually for a higher price.

The key factor is pricing. People simply cannot afford to buy flats anymore. Even the middle class is struggling. If you want a two-bedroom apartment in Prague, you need 10 million Czech crowns. You need about two million in equity and then there’s a 5% interest rate on the mortgage – for a young family, that’s simply becoming unaffordable. So, developers realized it’s better to do BTR and sell to big investment funds that have the money and need to buy. The funds can then offer an excellent product with stability and guaranteed indexation that tenants can afford.

What is the impact of AI on your business and clients?
Even from the first meeting or the first email, you can tell that a client has been consulting with an AI agent. It’s like when you go to a doctor after asking ChatGPT about your symptoms – you think you know what’s going on. But then the doctor says, “Yes, in general you’re correct, but in your particular case, you also need to consider this and that.” And I think it’s the same with any profession, including ours.
On the other hand, it does give them some background, so they’re actually more prepared for meetings. Your role is still to advise on what works and what doesn’t because of, for example, specific local regulation.
But the concern I had already two years ago is that AI still can’t just say “I don’t know.” There are already cases in Czech courts where a lawyer relied on an AI-generated summary or even case law, which turned out to be completely fabricated.

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That expansion option makes sense especiall when you learn that BP vacates in April 2028; after that, a Foster + Partners retrofit will strip the 1990s-era shell back to its frame, add two storeys and a roof terrace, and deliver 11,200 sqm of net office plus terracing across three levels. LBBW/Berlin Hyp and Aareal Bank are providing acquisition finance; YardNine, the London development manager behind EightyFen and Fifty Paddington, is running the redevelopment. The Hong Kong landlord clearly didn’t feel comfortable taking on the redevelopment and releasing risk.

It’s the second London office buy for Karel Komarek’s group in under a year — KKCG quietly acquired The Burlian at 80 New Bond Street from Hines for roughly £195 million in late 2025. That brings its combined London outlay to about £486 million. The UK platform is run by Peter Holden, poached from Partners Group early this year.

Komárek’s not the only Czechoslova with a view of the Thames. Penta Real Estate launched a £1 billion residential JV with Ballymore — a 52-storey Canary Wharf tower, Embassy Gardens units, and a Brentford scheme totaling 1,000-plus flats. HB Reavis sold Worship Square in the City for £185 million, while Daniel Kretinsky’s EP Group has completed a £3.6bn takeover of the Royal Mail. Czech capital accounted for 36% of all CEE-region investment in H1 2026 — and the domestic markets can no longer absorb it. London looks like a good place for the surplus.

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According to ARK’s president Miroslav Duda, the complaint is simple: if it walks like a brokerage and charges like a brokerage, then it’s a brokerage. That makes naming itself “without an agent” and claiming to charge no commission is misleading. What makes the case interesting is that Bezrealitky doesn’t really disagree on the substance of the issue — its own marketing head Pavel Skalsky describes Komfort as a “full-fledged real estate brokerage” on the company’s website. The dispute is about the label, not the service.

But this fight is going in both directions. In its comments, ARK called the 1.5% fee Bezrealitky charges a “standard and customary” charge for standard real estate agencies. But Bezrealitky’s CEO Hendrik Meyer challenged the country’s other agencies to charge such a small amount. “If that’s a standard commission, we invite all sellers to demand 1.5% plus VAT from their own agent. They can write to us about how the agent reacted,” he said.

He argues real estate agencies have turned commissions into a goldmine: as residential prices have ballooned in recent years, agencies continue to charge between 3% and 5% for their services. At the same time, Meyer claims digitalization has reduced the amount of work involved by 40%.

Bezrealitky’s ultimate claim is that AI and digitalization are making the work of human brokers redundant. The reality seems to be that Bezrealitky has been quietly becoming a brokerage for years, and it’s the ethics of its very name that ARK has now challenged. Whether the branding crosses a legal line is now up to the Czech Trade Inspection Authority to decide.

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A passage, not a shopping center

The building’s ground level is organized around a passage connecting two bus stations and the neighboring park. Some 2,300 sqm of retail lines the route, all targeted at tenants of Hila and rest of the Brumlovka neighborhood. A corner bistro is already pre-agreed and other shops are negotiating about the placement of their shops. Forejt is in no hurry to fill the rest, preferring to get the mix right the first time.

“All of the retail in Brumlovka is a service organization for the rest of the campus,” he says. “We collect rent at all the units, but we set reasonable rents for the space.” Unlike your standard shopping mall, Passerinvest charges a flat fee, with no turnover component. It’s a long-term logic focused on placemaking, instead of immediate income. “You don’t want to rebuild the tenant mix every two years. We try to find services which are not in the area, or which are under-delivering,” Forejt says.

In a nod to the importance of community-building, a restaurant at Brumlovka is to provide discounted meals for seniors and others after 3pm. It’s expected that other providers would join this non-waste strategy. In one section of the sloping property, seven-meter ceiling heights allow for a space-in-space layout, creating the option of connecting to the floor above via internal staircases.

Radiant ceilings and lower service-charges

The office component of the building offers a variety of floorplates, maxing out at 4,000 sqm, but they all revolve around a generous atrium. Some of the outdoor terraces exceed 1,100 sqm. Starting rent is €24.50 per sqm per month on the lowest floor, rising to €26.50 at the top. Tenants who take less than 1,000 sqm can expect to pay an extra euro per sqm.

For Forejt, the building’s coolest technical feature is its radiant ceiling system. Instead of blowing conditioned air, chilled or heated water circulates through panels embedded in the ceiling. This transfers energy directly to surfaces and bodies below, much like standing in sunlight.

“It’s not delivering the temperature from the ceiling to the air, but rather to the first thing it connects with: it could be your body, the flooring,” Forejt explains. “It’s a different concept. Try to think about the energy as light.”

Since it deploys a far greater volume of water in the building’s system than usual, the building will keep cooling (or heating) for nearly an hour after machinery shuts off. Forejt says the next step is to exploit this thermal inertia by timing energy generation to periods of lower electricity pricing.

As for the bottom-line numbers, the service charge comes in at roughly CZK 111 per sqm per month. Assuming typical electricity consumption, total occupancy costs should amount to around CZK 138 per sqm.

71 apartments, operated in-house

Above the offices sit 71 rental apartments, ranging from 34 sqm studios to 136 sqm four-bedroom units. They are part of Passerinvest’s new in-house brand Balance Home, which will eventually operate around 400 rental units across Brumlovka and its planned Arboretum at Nove Roztyly district development. Leasing will be managed internally.

“If a major office tenant comes to me to request a flat to rent, we have to be capable of deciding,” Forejt explains. “If you outsource that leasing to a partner, you lose that ability.”

One building per year

Looking ahead, Passerinvest’s development schedule has turned into a production line. Hila is due in 2027. Sequoia and Orion follow in Q2 2028 and early 2029. Omega, still awaiting its construction permit, is targeted for 2030. After that, the company plans a full reconstruction of its Alpha building.

In fact, a series of reconstructions are on the way for Passerinvest, whose earliest buildings came online more than 20 years ago. That’s right around the time HVAC systems, piping, lifts, and bathrooms begin requiring heavy investment. Forejt estimates the cost of a full building reconstruction roughly equals the original construction cost.

To avoid major cash flow interruptions, Passerinvest has developed techniques for retrofitting occupied buildings, floor by floor. Ideally, this involves relocating tenants into flexible space within the campus while work proceeds. In some buildings, lease structures include options that allow Passerinvest to move tenants for full-building renovations temporarily. “You can’t always wait until tenants are moving out to begin work,” Forejt says. “In some buildings, it would not be possible to reconstruct the whole thing at once.”

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But that’s not the surprising part. Penta’s involvement looked to have been on the cards almost since June when J&T completed its acquisition of the project’s SPV HoldCo Bubny from CPI. The surprise bit is that Penta and J&T brought in another partner for the deal — a new investment vehicle called AKIPIA fronted by the Czech arms magnate Michal Strnad.

Penta took a 50% share of HoldCo Bubny as lead developer, with AKIPIA taking a 35% share. J&T stays on in the project with just a 15% share. “The investor approach prevailed — we will serve as a passive investor,” said J&T Real Estate chairman Dušan Palcr.

The motivation for CPI to sell Bubny will have been to focus on income-producing assets. With ratings agencies breathing down its neck to reduce leverage and interest rates threatening to ratchet even higher, the decision was really an obvious one.

In truth, Bubny was probably always going to need multiple sources of capital — and development know-how. After all, the site’s expected to absorb €3.7 billion of investment between now and 2050. That would include 10,000 new apartments spread across 25 blocks, including rental and student housing, offices, hotels, schools, and a park.

It would be hard to overstate the strategic nature of the location. Not only does it sit between two metro stations (Vltavská and Nádraží Holešovice), it’s now served by two train stations, after the recent opening of the Praha-Bubny commuter rail station. On top of that, the planned Vltavska Philharmonic project is the city’s most spectacular public investment in decades and will contribute vastly to the area’s value.

Ultimately, what’s striking about the news is what it says about the Prague real estate market. The ability of Czech capital to control the local real estate market has been obvious for years, but the range of high-stakes players working together on this vast undertaking is breathtaking.

Especially AKIPIA, which was set up literally the day before this whole transaction went public. Forbes rates its founder Michal Strnad as the richest Czech, and he’s joined by the late Petr Kellner’s former in-house lawyer Tomáš Brzobohatý and Marek Šmrha, who until recently was Penta’s own investment director.

Bubny has defeated every previous owner. But with Prague’s Metropolitan plan now providing planning cover for larger undertakings, the combination of Penta’s development skills plus the financial muscle backing them might just do the trick this time.

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But it’s the land owners along the route near the D1 that have the most to gain. In particular, 80 ha of agricultural land that’s zoned for commercial and residential use. Land registry records show that many of the key parcels now sit inside BFS otevřený podílový fond, an Avant-managed fund for qualified investors established only in November 2024.

The new road passes by Rozkoš and Hrnčiře on its way to Vestec, with two crucial intersections planned on the cadastral territory of Hole u Průhonic. These provide access to a project that’s long been known as the Northwest Development Zone (northwest of Pruhonice).  This agricultural land is zoned for a commercial-administrative district and a residential neighbourhood. But nothing can be built until the connector road opens. Further complicating matters, the Vestec connector can’t open until the next section of the D0 (D Zero) ring road is extended to Bechovice.

Source: ksus.cz

High capacity roads in heavily populated zones will always be controversial, so it’s not surprising that not everyone along this one is in favor of it. Take Tibor Švec, mayor of Vestec. “The way it’s been proposed, it won’t do anything for Vestec residents, so for us it’s a pointless project that makes no sense for the municipality,” he told Novinky.cz. “There are other interests here. For years now we’ve felt the pressure to raise the value of land near the D1 motorway through the construction of a new exit.”

The recent EIA filing marks the project’s second attempt at environmental clearance. The first, in 2012, produced a positive assessment — but landowners and the Prague-Křeslice district overturned the territorial decision in court a year later, forcing the project back to zero.

The Vestec connector’s history goes way back, having been first proposed in the 1970s, though it took until 1999 to become part of Prague’s master plan. Phase 1 opened in 2010, bringing traffic from the ring road to Vestec. Phase 2 has been stuck in pre-construction ever since. The Northwest Development Zone has a colourful past, having passed through Czech Land Fund into at one point Eurospektrum Group, which had connections to some political high-flyers, including the adviser to a former PM, the mother of a former head of Prague transport, and a former mayor of Prague.

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I was contacted by a number of people I’ve known from the past, and they’ve all indicated an interest to look at Hungary again. That’s good from my vantage point, because it hasn’t always been easy to show the value-add potential of Hungary. I’m enjoying this new wave sensation.

Also, because there’s a clean-out of the last regime, for lack of a better word, you see a more level playing field now with service providers. That’s the case in real estate but in many other industries as well. I think this will bring in a lot of new energy, new ideas, and creativity.

Can you give me an example of what you mean?
There’s a site in the middle of Budapest called Rakos Rendezopályaudvar, which is a huge, derelict railway station in the middle of Budapest of some 244 hectares. The Hungarian state did a deal with the Emirati development group Eagle Hills in recent years, that people dubbed “Mini Dubai”.

The approach to that project has changed dramatically because Budapest City exercised its preemption right and stepped into the contract. Budapest organized an international architectural competition for the site that’s attracted quite a number of firms. I’ve met some of them now and they’re all very international but combined with local firms. What’s so exciting is that suddenly they can get involved in the project, whereas in the past it would have been a closed shop.

In terms of the interest from foreign capital, how much do you think Hungary has actually missed out on? There aren’t many these days in the Czech Republic or Slovakia either, but that’s a relatively new situation.  

The Hungarian market has struggled for a number of years for international capital. In general, there were some very low years of investment. The war in Ukraine, inflation, energy prices, but it’s the high interest rates that have been the biggest issue because that just knocked out a lot of the market.

I think Hungary was fortunate in that domestic investors stepped up, whether it was the likes of Erste Bank open fund or OTP Banks fund or whether they were investors linked to the NER network (NER= System of National Cooperation — an ecosystem of domestic business elites and investment funds closely tied to the Fidesz party). In some ways, while you might question transparency, a number of legacy projects were picked up, finished, and completed. There were some terrible examples of properties left in disrepair that were then developed and have become functioning assets — hotels, for example. But yes, we’ve had the retreat of the Austrians and German investors. English money disappeared a long time ago, but that’s not an uncommon phenomenon as we know, investors come and go for many reasons, not just political.

The lack of transparency was one of the primary complaints of the new government and how they built support. Is there going to be a reckoning now on the property markets? Can it ever all be unravelled?

The new government has set up this policy of fiscal transparency and anti-corruption reforms. But the verdict’s out on how impactful that will be. Because everything was done on a “legal basis” in Hungary. You could argue there’s nothing to “unravel”.

On the one hand, you could question how some of these people became incredibly successful so quickly. A good example is the Gellert Hotel, part of a portfolio that had been owned by an English group. They made very few investments and let the property fall into a sorry state. Evenutally the hotel ended up in the possession of a group linked to a relative of Orban. On the other hand, scaffolding is up there and work is underway to refurbish it as a Mandarin Oriental. That’s a great use for an iconic, landmark hotel and it’s an improvement over what was there. It’s a huge issue.

Where are the opportunities today? Projects that have lain dormant for years? Existing properties where owners are suddenly looking for an exit?

There’s capital rotation underway. If someone owned a property and bought it 15 years ago, there’s a better chance of exiting today than there would have been a year ago.

I think the level of liquidity will increase. Personally, I don’t think pricing is going to change much — there might be more stock on the market, which could bring it down a bit. But in general, liquidity will increase.

Development will increase, especially in retail. We had legislation that banned retail plazas, but as I understand it, this is going to be watered down or repealed.

Also, Budapest is quite a strong target market for hospitality, as it has far fewer rooms than Prague, for example. And the tourist numbers are growing. Budapest has been bubbling away all these years and is actually working quite well. It’s just that these elections have given it all a bit of a shot in the arm.

Hasn’t there been a Budapest discount for years now? Yields for commercial property have always been a bit higher.

They’ve been higher, which was linked to the so-called country risk, and because banking debt was more expensive. There’s also a bit of historical context, because Budapest’s office sector tended to have high vacancy — we had 25% vacancy at one stage. But I think if things remain equal and the new government creates stability and is seen to be hitting the right path, you could see yields converge back down towards Prague levels.

How about your business? Are you seeing a new impetus now? More investors interested in getting into the city?

We do project and asset management, along with investment advisory, which has been my role. We’ve been working with Hungarian capital going out of Hungary for some time, thanks to which I’ve expanded my geography to other parts of Europe. That includes doing business in London, where there’s basically no Hungarian equity. By contrast, there’s a growing Czech present there (London), which is great to see. But while we’ve been trying to insulate ourselves by working abroad, it’s nice today to be able to dust off the old files on Budapest properties and help clients with them.

Have prices already risen because of the elections?

Right after the election weekend, I think owners probably added 10% to their asking price. It’s definitely firmed the resolve of owners.

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The post Hamish White (REM Group): Budapest yields could converge towards Prague levels first appeared on ThePrime.cz.