Capital value increases during 2023 will be minimal according to a new Savills report, which sees few prospects for rental growth. And while there’s a chance for a return in investment activity, we’ll have to wait until the second half of the year for it. That’s assuming that the economic outlook improves, since it could help unlock around USD 828 billion in “dry powder” that’s available for real estate investment. That’s 80% more than investors had on hand in 2019, before the pandemic.
This means that core market such as Prague’s CBD office sector will continue to be attractive, given the lack of well-located, energy efficient buildings. Savills’ Czech MD Stuart Jordan says prime rents should “edge upwards” as a result. The same goes for prime logistics hubs, where a lack of speculative development and rising e-commerce penetration rates will suppress vacancy.
“CEE markets are very unlikely to buck the trends of global price movements, investor sector sentiment or the rapid race towards sustainability,” says Jordan. “But open-end fund structures and long-term investors will find value later in the year once price adjustments have led to value benchmarking.”
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