The Czech real estate market is experiencing its strongest periods since before the pandemic, with significant activity across hotels, retail, logistics, and offices, according to CMS Partner and Head of CEE Real Estate and Construction, Lukas Hejduk. Strong domestic capital, successful investment legislation, and high demand are driving the market.
“The market is really strong at the moment, with a lot of activity happening across all sectors,” Hejduk begins. “We’ve seen some of the hottest transactions recently, including the sale of the largest hotel in Prague – the Hilton – as well as the Four Seasons, along with several other upscale and luxury hotel deals. The retail market is also extremely active and highly sought after, with major transactions involving large shopping centers and retail-oriented properties.”
“The office sector is also strong and there are still large transactions taking place, and more are expected,” Hejduk continues. “Logistics continues to be very dynamic as well. Germany seems to be heading toward some form of economic recovery, and that is already having a positive effect on both Poland and the Czech Republic. This growing demand is fueling activity, especially in logistics, as these markets serve both Czech and German needs. It’s a really good period for the real estate sector – we haven’t seen a market this strong since before the pandemic.”
“Real estate tends to be one of the less dynamic sectors in the Czech Republic when it comes to legislative changes,” Hejduk points out. Still, one area of regulations where the country has done exceptionally well is collective investment law. “The Czech Republic has developed a framework that has led to the significant growth of Czech REITs, which now dominate the local market,” he explains. “About 90% of the market is driven by domestic capital, with Czech investors often buying assets from international investors. But the local market is becoming too small for some of the larger Czech players, and we’re seeing them expand into Poland, Germany, the UK, and other parts of Western Europe. It’s a real success story of well-designed legislation.”
On the flip side, Hejduk states that construction law is a major weak point: “the current construction act results in a very slow permitting process. Despite several reforms over the past few years, including attempts at digitalization, the efforts have largely failed to the point where they had to shut it down, along with halting many ongoing permitting processes. While there are attempts underway to fix it, there isn’t much optimism to see a quick permitting process anytime soon. This is obviously a bottleneck for the Czech economy in general. But, from a real estate investor’s point of view, it’s not necessarily a bad thing because it means less new development, which helps existing investments hold their value longer. It really depends on the perspective you take.”
Still, Hejduk notes that while the transactional side has rebounded, “law firms are under growing fee pressure while facing a shrinking pool of young, motivated lawyers, partly because legal careers no longer offer the top salaries they once did, now competing with tech and even public sector roles.” He adds that “the legal industry is at a pivotal point of technological disruption by artificial inteligence, with firms needing to adapt to entirely new ways of working as the profession undergoes its biggest transformation in decades – an exciting but uncertain shift that will redefine what it means to be a lawyer and a law firm in the coming years.” Despite that, “I’m excited about the future of the legal industry,” Hejduk says in conclusion.
