GTC announced acquisition of 90,000 sqm plot next to Sazka Arena (new sport and concert stadium) in Prague, Czech Repulic. Project designated for this area includes office complex with rentable space of 80,000 sqm developed in stages and shopping centre with 40,000 sqm of space and potentially a hotel. The cost of investment is estimated at approximately EUR 265m and start is scheduled for 4Q2007. GTC holds 29.7% interest in this project.
Our view:
As this project is outside the city center in former industrial area we could expect rents to reach EUR 12.5-13.5/sqm/month. Vacancy rates in office segment in Prague currently stands at 11%. We are more positive towards planed shopping centre as more and more residential units starts to be developed in that area with obvious lack of retail space nearby and topped with numerous events in nearby Sazka Arena througout the year. Healthy economic growth should further support interest of international retailers in outside city center shopping malls. Vacancy rate in retail segment increased to 2.9% in 1H2006 and rents in this area could reach EUR 50-60/sqm/month.