How would you compare the liquidity of the Czech market compared to Poland?
It’s a complex question. The Czech market is dominated by local capital, to an almost ridiculous degree. You don’t have that in Poland, even if the market share of local capital has increased recently to around 30% from just single digit. It’s still low in comparison to the rest of Europe.
In the Czech Republic, I describe the capital as conditional, meaning it may not be around tomorrow. There’s demand here for institutional grade product. Then you have demand for low value assets that offer a good yield, but only from the local aggregators — meaning local funds that are building their portfolio and are collecting equity from distribution as it comes.
The biggest issue in the Czech Republic is that middle part where you are exceeding the level of the value that local aggregators can afford, but below the level of those institutional high-grade investors that are looking at the products across Europe… That’s where I see the biggest bid and ask spread.
In Poland, the story is a little bit different. The structure of the capital is different. You have privates, you have foreign institutions, you have private equity, you have diverse sources of the pockets of the capital. They’re all chasing the deals as per the strategies they have. So, you see some people chasing core plus and you see the funds chasing the value add.
In other words, you see a greater variety of investors with a greater variety in their sources of capital. Which means they’ll be chasing a wider range of assets at different price levels. That there’s more of a chance that a given property will attract a buyer thanks to this variety.
Exactly. And to expand on that, I believe that demand in the Czech Republic will stay in those two defined brackets. At least until institutional foreign capital returns and starts bidding in the middle segment. Without that, I think we’ll continue to view Czech capital as conditional, when it comes to transactions.
Even though last year was such a strong year for deals?
Czech investment volumes were super successful in 2025, but I’m not sure that’s sustainable. Whereas in Poland, you’ve seen a structural repricing defined by the capital that has left, but also by the capital that has entered the market. And in my view in Poland, you have more market players with the fund vintages around 2018, 2020, which will have different stories to offload their current portfolios.
Where do you see the best opportunities for creating yield?
First of all, it’s Central European logistics. You have the same covenants; the same tenants being underwritten here as in Munich or London. They have the same parent companies, so your credit risk is pretty much the same. You have very much the comparable financing conditions that you can achieve because your senior loan providers are international bank providers. The biggest difference we see is the yield spread between the east and the west. That spread still enables a capital growth story in CEE.
ARETE’s current fund is 100% leased. Is that luck, discipline, or is the market simply that strong?
You have to underwrite correctly at the beginning. It’s the old rule: if you buy well, you sell well. The difference with us is we don’t underwrite the building; we underwrite the income first. When I go and buy an asset, or an SPV holding an asset, the first thing I’m interested in is the vendor’s story, why is he selling? Then, what is the ultimate strength of the income? Then we look at what we could potentially do with the building until the exit in the existing fund that we have. But we have to do this looking through the eyes of a future buyer.
But there’s a lot of work that goes on between buying and selling and the asset though, isn’t there?
There is, but a lot of managers stop paying attention between year three and year six of the ownership cycle. Your standard manager starts looking at disposal plays, rather than paying attention to the strength of the income they have with existing tenants. But you’re risking your relationships with tenants this way. They can slip away or they’re not as strong as they should be. Within a couple of years, you end up with tenants leaving or else not being happy or not paying the rents you need. We do the opposite; we try to renew whenever possible and to be proactive with tenants whenever possible.
Is that because a renewed lease is the best guarantee of future income?
These days, tenants are only willing to pay prime rents to landlords who have a working operation model, not to those who are only trying to collect rent. You have to have a proactively working asset manager who’s asking about the tenant’s current needs and plans. Is there anything that needs to be done from our end in order to support you? We want to act as a partner, not just somebody who happened to acquire a building that has you on the rental sheet.
Has the industrial market always been so competitive? Or was there a tipping point when this shifted?
The market has shifted. In my opinion, from 2015 to 2022, the market enabled underperforming managers to create decent returns out of mediocre assets without adding much asset management activity. This has changed across the whole spectrum. We’re now in a market where you have to work hard in order to get your cash yield working. And if you’re not collecting rent properly from a tenant you understand, and if you’re not managing proactively, then the thesis for any strategy you’re running will break down eventually.
Miroslav Barnas is the Chief Investment Officer at ARETE
Also in ThePrime
Prague new-flat prices climb 2.1% as supply slides toward exhaustion
New podcast! Pavel Novak (Savills) on the worsening office squeeze
