For the first quarter of 2014, results of the RICS Global Commercial Property Monitor shows positive sentiment of investors and occupiers across all sectors although recent economic data records only a fragile improvement of the main economic factors. Capital values are expected to grow, with the industrial sector indicating the highest Net Balance of 40% followed by the office (30%) and retail sectors (20%) respectively.

Moreover, the Investment Sentiment Index comfortably reached positive territory, with a reading of +22, underpinning revived appetite of investors particularly in terms of core assets. It is expected that institutional investors will come back to the market on a larger scale as recent transactions have been dominated by Czech and Slovak investors.

"In 2014 and 2015 we are going to see an increase in capital values in terms of prime assets supported by a yield compression for all the real estate classes and, to some extent, by positive occupier market signals particularly for the industrial and high street retail segments. Banks are going to ease their loan-to-value requirements and margins will decrease in line with the competitive trend prevailing on the financial markets", says Karel Klečka MRICS, RICS Czech Republic Board Member.

The occupancy market enjoys strong demand particularly in the industrial sector which shows a 70% Net Balance. Within the industrial sector, and to a lesser extent the prime retail sector, rents are expected to grow as inducement packages will reduce following the strong performance of these markets.

However, the office segment comes under pressure showing a negative Net Balance of -20% with incentives expected to increase and rents to fall as a result of the highly competitive occupancy market and a strong pipeline.

"Due to the Czech National Bank intervention and depreciation of the Czech currency at the end of the last year we feel that Czech exports will record a strong performance leading to reinforced tenant demand in the industrial sector. As available space is limited at the moment this may affect rents and incentives provided", says Jaroslav Kaizr MRICS, RICS Czech Republic Board Member

The results of the Q1 2014 RICS Czech Commercial Property Monitor show that the market for distressed properties is set to tighten across the board. Stuart Jordan FRICS, Chairman of RICS Czech Republic says:" The supply of distressed assets will remain broadly unchanged. The fund managers will focus on active asset management and remodelling or refurbishment of older schemes to face new projects being developed."

Source: RICS
Publisher: RICS