The rental of older offices may decrease in price next year

Prague - The rental price of certain types of office spaces may decrease by up to ten percent next year. Rent will primarily decline for older properties without premium fittings. Conversely, prices for high-quality administrative buildings will increase by up to 15 percent.
    "In 2007 and 2008, we expect the peak of the real estate boom in commercial properties. We anticipate that the price level will stabilize. The growth in property prices will occur at a slower pace. In some segments, there may even be a temporary decline in prices," said Přemysl Vávra.
    According to Vávra, the yield on investments in commercial real estate is gradually decreasing. For example, last year, the yield from leasing office spaces was around 6.5 percent. This year, it will be about 5.5 to 6 percent, which is more common in Europe. This yield level is likely to stabilize in the coming years. Given that rents will remain on average the same or only slightly decreasing, there is room for growth in prices for quality administrative buildings, by as much as ten to 15 percent, added Vávra.
    Domestic customers, according to the company, are moving in search of better options. Interest in offices in older properties, even those that have been renovated, is declining. This is related to the construction of new administrative centers. On the other hand, demand for office spaces that meet modern trends persists. These include fully air-conditioned spaces, with parking options, open space designs, and high hygiene standards, as stated in the press release.
    According to AAAINDUSTRY.CZ, the real estate boom in the Czech Republic is driven by economic growth, persistently low interest rates, and an influx of foreign investment.
    However, there remains room for expansion in the commercial real estate market, especially in Prague. Conversely, in some regional cities, such as Hradec Králové, the market is already saturated. The company further states that the best opportunities for investment expansion currently lie in logistics spaces, namely warehouses and storage facilities.