DTZ informed in its regular report about real estate market situation in Czech Republic during 1H06. Total office space reached 1,900k sqm out of which 66% were newly build and 34% refurbished, with vacancy rate continuing to decline for newly build offices to 10.4% and slight increase to 12.3% for refurbished. Rents remained stable for class A in a range of EUR 17-19 sqm/month, inner city in a range of EUR 14.5-15.5 sqm/month and outer city offices EUR 13-14 sqm/month. As retail sales increase, it is expected retail segment will continue to growth, mainly in regional cities like Brno, Pilsen or Ostrava. Same is expected for logistical properties especially in Ostrava region with planned Hyundai investment there.
Our view:
We see this news as neutral and confirming fact, that rents reached the bottom and demand for new offices prevails. Furthermore it also proves Orco’s strategy to expand its business into regional cities which provides higher upside as economy growth.