Czech Property Investment Accelerates in Second Quarter

Investment in Czech commercial property reached approximately €1.4 billion in the first half of 2026, already exceeding the total recorded during all of 2023. About €1 billion was completed in the second quarter through 25 transactions with an average value of €40 million. Domestic funds and companies remained the main source of liquidity, accounting for 74% of quarterly volume. Living assets became the largest sector, narrowly surpassing offices.

Quarterly investment volume almost triples

The market accelerated sharply after a comparatively weak opening to the year. The first quarter produced 13 transactions worth about €340 million. Investment approached €1 billion in the following three months, while the number of completed deals increased to 25. Even allowing for differences between consultants’ classification methods, the figures show a substantial improvement in liquidity.

Second-quarter volume was almost three times the first-quarter total. The average deal size reached €40 million, although several acquisitions worth close to or above €100 million had a disproportionate effect on the calculation. Without those large transactions, activity would still have improved but the headline increase would have been less dramatic.

iO Partners classifies investment according to transaction completion or the transfer of the asset. Some properties were announced for sale in late 2025 but entered the 2026 statistics only after legal completion. This difference in timing can produce discrepancies between consultancy reports and the financial reporting dates used by sellers.

Czech buyers control three quarters of volume

Domestic investors supplied 74% of second-quarter capital, leaving 26% for international buyers. The Czech Republic continues to differ from several Central and Eastern European markets where large property transactions rely more heavily on foreign institutions.

A large domestic investor base reduces exposure to fluctuations in international capital flows. Czech funds raise money from private investors, insurers, wealthy clients and other savings pools, often in the same currency as the underlying assets. Local managers also have more direct knowledge of tenants, regulation and individual districts.

The concentration creates a separate risk. If subscriptions into domestic property funds weaken or investors request more redemptions, the number of potential buyers for major assets could decline quickly. International capital is not currently large enough to compensate automatically for such a change.

CBRE forecast at the beginning of the year that Czech commercial-property investment would remain above €3 billion in 2026. Meeting that projection would require approximately another €1.6 billion of transactions in the second half.

Living assets become the largest sector

Living property represented 38% of second-quarter investment. Offices accounted for 35%, mixed-use assets for 12% and hotels for 4%. Retail and industrial property each generated 3%, with the remaining share falling into categories not separately identified in the short report.

The unusually high residential share was driven mainly by the sale of a major portfolio in Prague’s Písnice district. The transaction, valued at less than €200 million, was the largest listed deal of the quarter and materially changed the sector distribution.

WOOD & Company City acquired about 760 apartments from CIB Group. Together with SATPO, the new owner plans to renovate the buildings, improve energy performance, upgrade public spaces and develop the wider area under the VITA Písnice brand. The project has a horizon of more than ten years.

The portfolio is located near the planned extension of Prague’s Metro D line. The investor may create additional value through refurbishment and better transport connectivity. Construction schedules, renovation costs and rental regulation remain important risks.

The deal illustrates growing institutional demand for rental housing. Hundreds of tenants provide a more diversified income stream than a single corporate occupier, although residential portfolios require extensive management, maintenance and communication with residents.

Offices remain central to market activity

Office transactions generated more than one third of quarterly volume. Major deals included Port7, Na Příkopě 14, the Trimaran and City Element buildings and the T-Mobile headquarters at Roztyly.

Port7 was valued at approximately €130 million. The Holešovice complex comprises three office buildings with about 36,000 square metres of leasable space, retail units and plots for future development. The premises were fully let, and AFI Group acquired the property.

Skanska announced the disposal in December 2025, but the asset transfer was scheduled for the first half of 2026. The timing demonstrates why quarterly market statistics can differ from announcement dates and sellers’ accounting treatment.

Generali Fond realit acquired the historic Na Příkopě 14 building in central Prague from CPI Europe. The price exceeded €100 million and was placed in the €110–120 million range in the quarterly review. The property combines offices, a supermarket and high-street retail and holds LEED Platinum certification.

The Trimaran and City Element buildings in Pankrác were purchased by the Czech Aurelia fund from a structure managed by PIMCO Prime Real Estate and associated with Allianz investments. Both offices hold LEED Platinum certification, and the combined price was reported at below €100 million.

Another significant transaction involved the office building next to Roztyly metro station that serves as T-Mobile’s long-standing headquarters. The fully occupied property benefits from direct access to Metro C, reducing vacancy risk while leaving the owner dependent on one major tenant.

Limited office availability supports values

Prague’s modern office stock stood at about 3.93 million square metres in the first quarter. Vacancy remained at 5.8%, while almost 313,000 square metres was under construction. More than 63% of the development pipeline had already been pre-let.

Low vacancy supports well-located properties in the centre and near metro stations. Even when tenants remain cautious, modern buildings with lower energy costs have an advantage over older assets requiring substantial operational and capital expenditure.

Prague Research Forum placed prime city-centre rent at €30 per square metre a month. Inner-city rents ranged from €21 to €22, while outer districts stood at €15.50 to €16.50. The difference illustrates increasing polarisation between prime locations and secondary stock.

Gross leasing activity declined by 26% from the previous quarter to 105,400 square metres. Net absorption nevertheless remained positive at 7,800 square metres, indicating slower transaction activity rather than widespread office releases.

Prime yields stop declining

Prime property yields were broadly stable during the second quarter. Offices and industrial assets stood at 5%, shopping centres at 6% and high-street retail at 4.5%. The office yield was 25 basis points lower than a year earlier, while the other tracked sectors were unchanged.

A property yield expresses expected annual rental income as a proportion of the asset price before financing and several operating adjustments. A lower yield generally implies a higher valuation for the same income, while a higher yield reflects a lower price or greater return required by investors.

Stable yields suggest that most of the repricing caused by expensive financing has already taken place. Buyers and sellers have moved closer in their valuation expectations, although a renewed increase in interest rates could widen the gap again.

The Czech National Bank raised its two-week repo rate from 3.5% to 3.75%, effective June 19. It was the first increase after a prolonged easing cycle. The five-year euro interest-rate swap reached 2.74% at the end of June.

The gap between a 5% prime office yield and the five-year euro swap rate was about 2.26 percentage points. That margin must compensate for credit risk, property management, vacancy, refurbishment and investor profit. Further increases in financing costs could make transactions at current valuations less attractive.

High-street rents continue to increase

Prime office rents remained at €30 per square metre a month. Shopping-centre rents stood at €155 and industrial rents at €7.25. Prime high-street rent increased by 2.4% from a year earlier to €215 per square metre a month.

High central-Prague retail rents reflect scarce supply, tourism and competition among international brands for a limited number of addresses. Growth in headline rent does not necessarily produce the same increase in landlord profit because refurbishment, rent-free periods and tenant incentives can reduce effective income.

Retail conditions remained uneven at the beginning of the year. Shopping-centre footfall stabilised, turnover growth was broadly flat and e-commerce generated the strongest sales increase. Retail parks continued to outperform because of stronger occupier and investor demand.

Turnover at regional shopping centres previously increased by an average of 2.1%, while rents rose by 2.3%. Both rates were below inflation, indicating pressure on the real profitability of tenants and landlords despite nominal revenue growth.

Industrial property contributes only 3%

Industrial and logistics assets generated a small share of quarterly investment even though their prime yield matched the office rate at 5%. The result may reflect transaction timing rather than a lack of demand, as a single portfolio sale could materially alter the sector’s share in the next quarter.

Investors continue to view logistics as a long-term asset class but are becoming more selective about location, energy performance and tenant strength. Properties near major motorways and manufacturing centres retain an advantage, while older warehouses may require significant expenditure.

Demand is supported by manufacturing, automotive suppliers, e-commerce and changes to supply chains. Risks include the Czech economy’s reliance on exports, conditions in German industry and the future cost of energy.

Hotels fall behind living and offices

Hotels accounted for 4% of second-quarter investment. The share was lower than in some previous periods when individual hotel acquisitions made a substantial contribution to total market volume.

Prague hotel demand remains supported by international tourism and a limited pipeline of large new properties. The city continues to rank among the most visited in Central and Eastern Europe, while the recovery in travel has moved operating performance closer to pre-pandemic levels.

A small quarterly share does not necessarily indicate deterioration. Hotel transactions are irregular, and one major asset can change the annual allocation of capital. Investors remain focused on occupancy, average room rates, operating profit and renovation requirements.

Economic growth supports demand as rates create risk

The quarterly report assumed Czech economic growth of 1.9% in 2026 and average inflation of 2.45%. Moderate expansion should support tenant employment and consumer demand, but it does not guarantee rapid rental-income growth.

The central bank’s rate increase complicates the outlook. More expensive debt raises acquisition costs, particularly for buyers using higher leverage. Owners with fixed-rate borrowing are protected until refinancing, when debt service may become more expensive.

Domestic funds often use less leverage than international buyers targeting short-term equity returns. This can help them complete acquisitions during periods of expensive credit, but it does not remove the risk of lower fund valuations when portfolios are reappraised.

A few major deals still dominate the total

The five largest transactions may have generated more than half of second-quarter investment. That concentration means a strong quarterly figure cannot yet be treated as evidence of a broad recovery across every asset class.

The increase to 25 completed transactions nevertheless confirms activity below the top end of the market. Medium-sized and smaller acquisitions provide liquidity for regional properties, retail parks, warehouses and individual office buildings.

The second half will test whether domestic capital inflows remain strong. Important indicators include newly signed deals, bank financing, prime-yield movements and sellers’ willingness to accept revised pricing after the interest-rate increase.

As International Investment experts report, the Czech market entered the second half with strong headline numbers, but the quarterly total depended heavily on a limited number of major Prague transactions. Domestic capital provides protection from a withdrawal of global investors while increasing dependence on subscriptions into Czech funds. Stable yields and strong rents for high-quality assets support valuations, but the June interest-rate increase reduces the available return margin. The central risk is growing polarisation between expensive prime buildings and secondary assets that require investment in energy performance, refurbishment and tenant retention.

FAQ on Czech Commercial Property Investment

How much investment entered the Czech market?

First-half investment reached approximately €1.4 billion, including about €1 billion in the second quarter.

How many transactions were completed?

Investors closed 25 second-quarter deals with an average value of approximately €40 million.

Why did living become the largest sector?

Living accounted for 38% of volume mainly because of the acquisition of approximately 760 apartments in Písnice for less than €200 million.

What was the domestic investor share?

Czech capital represented 74% of quarterly volume, leaving 26% for international investors.

Which transactions were the largest?

The largest listed deals included the Písnice portfolio, Port7, Na Příkopě 14, Trimaran and City Element and the T-Mobile headquarters at Roztyly.

What was the prime office yield?

Prime office yield stood at 5%, 25 basis points lower than a year earlier.

What was the top Prague office rent?

Prime city-centre office rent was €30 per square metre a month.

What could slow further investment growth?

The main risks are higher interest rates, weaker inflows into domestic funds, reliance on a few large deals and rising refurbishment costs for older buildings.