Published on and written by Cyril Jarnias
In just a few years, commercial real estate in the Czech Republic has evolved from a peripheral Central European market to a true powerhouse, capable of competing with Western European countries. Record investment volumes, dominance by highly liquid domestic capital, a robust leasing market in both offices and logistics, a transforming yet solid retail sector, and a rebounding hospitality industry: the country now ticks many boxes for investors seeking yield and stability.
This article draws on the most recent data from major real estate advisors (CBRE, Cushman & Wakefield, Savills, Knight Frank) and local funds to detail market opportunities.
An Expanding Market, Driven by Domestic Capital
The first striking element in the Czech Republic is the dynamics of invested volumes. After several quiet years, the curve has clearly rebounded.
The amounts committed to Czech commercial real estate are expected to approach €4 billion in 2025, more than double the annual average observed between 2021 and 2024 (around €1.5 billion). In 2026, analysts expect a slight decline but still at a high level, above €3 billion, which would anchor the market on a sustainably high plateau.
Transaction volume reached €2.1 billion in the first half of 2025, up 187% compared to the same period the previous year.
The Rise of Czech Investors
The other distinctive feature of the market is the extraordinary weight of domestic capital.
In the first three quarters of 2025, local investors accounted for 80% of volumes, a trend expected to continue into 2026. In the first half of 2025, they completed 39 of the 43 recorded transactions, representing 76% of volumes. Another source tallies 61 deals closed by Czech capital for a total value of €3.4 billion, or 83% of the market.
This dominance is explained by record fundraising, an excellent understanding of the local landscape, and the absence of a ‘non-domestic market’ risk premium borne by foreign funds. At the same time, major Western European players remain cautious due to geopolitical uncertainties and the past rise in interest rates.
For a foreign investor, this configuration is ambivalent: it means strong competition from local players for prime assets, but also a very liquid and professional environment, where the presence of Czech institutional funds secures exit markets.
A Rather Favorable Macroeconomic Environment
The economic backdrop reinforces the country’s appeal. GDP is expected to accelerate, inflation should stabilize within the central bank’s (ČNB) target, and unemployment remains one of the lowest in Europe. Domestic demand remains solid, while the recovery in external demand improves industrial prospects.
Indicators (growth, real wages, household confidence) are expected to evolve at a similar pace in 2025 and 2026, creating a predictable climate for office, logistics, retail, and hospitality leasing markets.
Offices: Scarcity of Prime Supply and Rising Yields
The office segment presents a paradoxical profile: very few new deliveries, good quality demand, increasing pressure on rents, and prime yields that eased slightly in recent years… which are starting to compress again on the best assets.
Prague, a Tight but Liquid Office Market
The total stock of modern offices in Prague stood at around 3.94 million m² in mid‑2025. The vast majority is Class A, and over 20% meets the AAA standard. Yet, new projects are becoming scarce: 2025 is set to record the lowest level of deliveries in Prague’s market history, with less than 27,000 m². For 2026, only 30,700 m² are under construction with delivery expected within the year.
In this context, the vacancy rate remains low, around 6.5% projected for 2025 and 2026. In Q2 2025, vacancy was measured at 6.6% with 259,000 m² available, a slight decrease compared to the start of the year.
The prime headline rent in Prague’s city center reached €30/m²/month in 2025.
This scarcity of new supply and polarization around the best buildings is leading to a growing gap between prime and secondary assets, both in rents and value.
| Office Indicators – Prague | Recent Level |
|---|---|
| Total modern stock | ≈ 3.94 M m² |
| Vacancy Q2 2025 | 6.6% |
| Prime rent city center | €30/m²/month |
| Prime rent inner city | €21/m²/month |
| Prime rent outer city | €15.5/m²/month |
| Prime office yield (Prague) Q2 2025 | 5.25% |
The prime yield for offices in Prague, which had fallen to around 4.8% in 2023, rose to 5.5% by end-2024 before stabilizing around 5.25% in 2025. The upward movement linked to the interest rate shock therefore seems largely absorbed, and prospects now point towards renewed downward pressure on the best assets, due to demand highly focused on well-located core buildings meeting ESG requirements.
Demand Driven by Existing Occupiers
Leasing demand comes mainly from companies already present in Prague. Major new international entrants are rare, according to CBRE, but existing companies are massively renegotiating their leases. In early 2024, renegotiations represented over half of new leases, and this trend continues.
Fears of a wave of office space release have subsided. The phase of massive subleasing of underutilized space is over. The increasing return of employees to the office, confirmed by occupancy surveys, is stabilizing demand. Major relocations are often postponed to the next lease cycle, increasing the importance of pre-leasing for projects under construction.
For an investor, this context means two things: overall resilient cash flows for well-leased core offices, and an opportunity for value‑add strategies on older buildings, to be repositioned to ESG standards and new uses.
Regions: Brno and Ostrava, Diversification Markets
Outside of Prague, Brno and Ostrava constitute the two structured office markets.
Brno had about 705,000 m² of modern offices in mid-2025, nearly 75% of which are Class A.
Ostrava, long associated with heavy industry, has about 246,000 m² of modern offices in mid‑2025. Vacancy, which was over 17% at end-2023, is declining towards 10.7%. Prime rents remain competitive (€14–14.50/m²/month), while several iconic renovations – such as the former Ostravica department store transformed into a business incubator – demonstrate a gradual repositioning of the existing stock.
These regional markets offer higher yields than Prague and more modest ticket sizes, interesting for diversification strategies or for players able to take a slightly higher leasing risk in exchange for additional yield.
Logistics & Industrial: A Structural Driver of Investment
While offices remain a historical pillar, it is logistics that currently acts as the locomotive. The Czech Republic combines a strategic location at the heart of European flows, a dense industrial fabric, and constantly improving transport infrastructure.
One of the Most Dynamic Logistics Markets in Central Europe
The stock of modern industrial and logistics space exceeded 12.9 million m² in Q3 2025, and is expected to surpass the 13 million m² threshold by end‑2025. In Q1 2025 alone, nearly 156,000 m² were delivered, mainly in the Karlovy Vary and South Bohemia regions.
Construction remains robust: over 1.07 million m² were under construction at end-March 2025, with an additional 500,000 m² in “grey vacancy” (shell & core delivered buildings not yet marketed), offering a reserve of latent capacity. Q4 2025 is set to see a peak in deliveries, notably with XXL projects like the 233,700 m² platform developed for H&M in Cheb.
In 2026, construction starts are expected to normalize, with the flow of new projects reduced by about half, to 650,000 m² expected compared to 1.2 million in 2025. This moderation in supply, combined with stable demand, is likely to support rental and valuation levels in the market.
| Industrial/Logistics Market – Key Figures | Recent Level |
|---|---|
| Total stock Q3 2025 | ≈ 12.9 M m² |
| Space under construction (end Q1 2025) | > 1.07 M m² |
| National vacancy | ≈ 4.5% |
| Prime logistics rent | ≈ €7.00–7.50/m²/month (Prague) |
| Prime industrial yield (H1 2025) | 5.00% |
| Sector share in H1 2025 investments | 27–28% |
Leasing demand is robust. In 2025, net take-up is expected to reach 1 million m², before stabilizing around 850,000 m² in 2026. Some periods have even recorded historical peaks: Q3 2025 was the second-best quarter in twenty years for new demand.
Logistics and transport account for a large share of this demand (68% of leases signed in Q1 2025), ahead of manufacturing (25%). E‑commerce, which had slowed in 2024, is starting to contribute again, with significant operations in distribution and retail in 2025. Furthermore, the Czech freight and logistics market, estimated at $15.8 billion in 2025, is expected to grow at an average annual rate of over 3% until 2030.
A Highly Regionalized Landscape, Conducive to Targeted Strategies
While average vacancy hovers around 4.5%, regional disparities are strong. The Plzeň region shows a rate close to 9%, while Greater Prague is practically at full occupancy with only 2.2%. These differences are reflected in rents: in Prague, prime warehouses rent for around €7.4–7.75/m²/month, compared to €6–6.5 in Brno or Plzeň.
Evolution of the geographical distribution of investment demand, marked by an expansion beyond traditional centers.
Prague, Plzeň, Brno, and Ostrava remain the main centers of attraction.
The share of demand towards these hubs has fallen from ~75% (2019) to just over 50% (2024).
Olomouc and Ústí nad Labem are gaining attractiveness due to lower costs, a more available workforce, and direct access to German markets.
This shifting geography creates windows of opportunity: in slightly more vacant markets, tenants are in a stronger position to negotiate rents or incentives, paving the way for acquisition strategies at more moderate prices, anticipating future tightening.
A Segment Highly Sought After by Investors
Investors have fully grasped this potential. In investment volumes in the first half of 2025, industrial and logistics assets represent around 27–28% of the total in the Czech Republic, and 32% when expanded to the entire CEE region.
Yields for logistics parks in the Czech Republic, around 5%, remain higher than in major Western European capitals and benefit from a robust leasing market. Prospects for 2026 indicate relative stability of these yields. However, a growing gap is anticipated between the best-performing logistics parks – ideally located and meeting ESG criteria – and older or poorly positioned assets.
An illustrative example is the sale of the Yanfeng industrial and logistics park in Žatec for nearly €50 million, the largest sale‑and‑leaseback operation in the sector in the last decade.
For an investor, the combination of a still slightly tenant-favorable market (with room for negotiation on commercial terms), high prime rents, and attractive yields makes Czech logistics a privileged ground for core, core+, or value‑add strategies, depending on the desired risk profile.
Retail: A Selective Market Between Mature Shopping Centers and Retail Park Boom
The Czech retail market has weathered several successive shocks – pandemic, inflation spike, slowdown in purchasing power – but has shown remarkable resilience. The country remains a preferred gateway for international retailers in Central Europe, and domestic consumption is rising again.
Shopping Centers: A Consolidation Cycle Rather Than Expansion
After a wave of shopping center openings, the following year will see practically no new space in operation under this format. Developers are focusing on projects already under construction or restructuring, with three major iconic deliveries expected by 2028: Dornych in Brno, Galerie Pernerka in Pardubice, and the renovation of Kotva in Prague.
In parallel, prime rents continue to trend upwards, albeit moderately. In shopping centers, flagship rents are around €150/m²/month for the best stores, while Prague high‑streets like Pařížská remain among the most expensive in the world with values around €235/m²/month for luxury locations.
Shopping center turnovers have overall surpassed their pre-Covid levels. However, their footfall remains lower than in that period. This gap between turnover and footfall is not expected to fully close in the short term.
The Retail Park Boom
The real driver of retail park expansion is retail parks. In 2026, over 170,000 m² of these convenience formats are set to be delivered, continuing an already well-established trend.
For retailers, these parks offer more contained rents, simpler operations, and more manageable charges than large malls. For investors, they often combine a loyal local customer base, low vacancy rates, and higher yields than prime centers.
Investment statistics confirm the appetite for this type of asset: in 2023, investment volume in retail parks nearly doubled compared to 2022, even though their share of the total retail sector remained modest.
An Environment Conducive to Retailer Expansion
The Czech Republic remains a must for new brands entering Central and Eastern Europe. After a wave of new entries in 2021 and 2022, the trend continues, with a growing array of international retailers and omnichannel concepts.
Retail sales are expected to grow by about 3% in 2026, one of the best rates in Europe.
Digital integration is increasingly part of the model: over 70% of surveyed brands report using artificial intelligence for marketing, personalization, analysis of customer preferences, or supply chain optimization. E‑commerce, which already accounts for nearly one-fifth of sales, continues to grow, but in an omnichannel integration logic rather than pure substitution of physical retail.
For the investor, the challenge is to select the right formats and the right locations: dominant retail parks in their catchment area, well-repositioned leading shopping centers, storefronts on high‑streets finally benefiting from returning tourist flows, and assets capable of reducing operating costs through ESG investments.
Hospitality: A Rebound Creating Limited Acquisition Windows
The Czech hospitality market, dominated by Prague, has finally recovered and surpassed its pre-pandemic occupancy levels. The number of tourists reached a new record, driven by the recovery of air connections and the capital’s enduring appeal.
Operational indicators for Prague hotels – occupancy rate, average price, and revenue per available room (RevPAR) – are rising significantly year-on-year.
Six hotel transactions were finalized in the first half of 2025, including two major deals representing over 81% of the investment volume.
The prime yield for hospitality, around 6.5% in H1 2025, is the highest of all segments, making it a particularly interesting asset class for yield-seeking investors. Analysts anticipate a possible slight compression of this yield as confidence in long-term performance strengthens.
The main limitation is supply: new projects remain measured, essentially in the luxury segment, and the stock of institutional-quality hotels for sale is scarce. The shortage of assets, combined with an improving operating environment, could therefore support prices and restrict entry windows for the best products.
ESG: The New Key Value Driver Across All Segments
It is impossible today to discuss real estate investment in the Czech Republic without mentioning the growing importance of ESG criteria. Under the combined effect of European regulations (CSRD, taxonomy, EPBD, SFDR…) and pressure from major international tenants, the line between “green” and “non‑green” is becoming a major determinant of value.
A Market Still Catching Up with New Requirements
The existing stock is not yet fully adapted to new standards. Lengthy permitting procedures limit rapid correction of supply, and a large number of assets – particularly older office buildings and retail space – need to be repositioned.
Property companies and investors are already arbitrating their portfolios: some are divesting assets deemed too costly to renovate, while others are positioning themselves precisely on these “value‑add” opportunities to transform them. The phenomenon of “brown discount” is becoming tangible: buildings not classified as “green” face discounts, linked to the capex needed to comply with future standards and occupant expectations.
Ultra-sustainable buildings can rent for up to 50% more than buildings with standard certifications.
A Measurable Value Premium
Sector studies suggest that improving energy performance can increase asset value by about 3 to 8% in residential and by about 10% in commercial. Conversely, nearly three-fifths of professionals surveyed in Europe report a discount for non-green assets, often in the order of 10% or more.
Banks and financial institutions are aligning their financing terms with these parameters: a good energy certificate is often a condition for obtaining financing, or for accessing so‑called “green” rates. Major players like CTP have issued green bonds to finance the certification and modernization of their industrial portfolios.
In the Czech Republic, nearly half of the modern industrial stock is certified, mainly with the BREEAM In‑Use label. Exemplary projects illustrate this ambition: Real Digital Cheb, Kaufland’s e‑commerce platform, achieved an “Outstanding” level with over 90 points, while the CHR2 building in CTPark Prague West is targeting a score close to 95%.
Opportunities for Investors
For investors, ESG actually creates two fields of opportunity:
– Green core: position on already high-performing assets (certified prime offices, highly sustainable logistics parks, efficient prime retail) by accepting slightly lower yields in exchange for better long-term liquidity and reduced regulatory risk.
– ESG value‑add: acquire at a discount well-located buildings lagging in standards, and finance refurbishment works (energy efficiency, sustainable materials, user comfort, soft mobility). Provided capex is well calibrated, this type of strategy can generate significant uplift in rent and exit value.
In a Czech market where many first-generation modern assets are reaching renovation age, this second niche is particularly relevant, especially in Prague and major regional cities.
Investment Vehicles and Tax Framework: The Advantage of Czech Funds
Beyond direct acquisitions, the Czech market is distinguished by the rise of a galaxy of domestic real estate funds, which constitute both competitors and potential partners for foreign investors.
Strongly Growing Real Estate Funds
The Czech National Bank supervises nearly one hundred real estate or mixed funds, whose combined assets under management reach tens of billions of koruna. They target annual returns ranging, depending on strategy, between 3% and 9% per year.
Cumulative performance of the Czech Real Estate Investment Fund between 2016 and 2024.
Its strategy illustrates a typical positioning: existing commercial assets in the Czech Republic and Poland, strong tenant diversification, with a preference for consumer goods retailers, warehouses/logistics, and service space.
Other vehicles like the Czech Development Fund (targeting 7–8% yield), residential funds (6–10% targeted) or sub-funds mixing residential and commercial complete the landscape. They have seen double-digit growth in assets under management, with sometimes total returns exceeding 70% since launch for the best performers.
An Incentive Tax Framework
Czech real estate funds benefit from a reduced corporate tax rate of 5% (compared to 19% for the standard rate). For individuals, holding fund units can, beyond a certain period (often three years), benefit from capital gains tax exemption, within certain amount limits.
The sale of the Palladium shopping center in Prague, valued at 17 billion CZK, illustrates how the ČNB regulatory framework and the influx of domestic capital have strengthened the ability of Czech real estate funds to intervene in the largest transactions, several of them acting as acquirers or co-investors in this deal.
For a foreign investor, these funds can be:
– credible local partners in joint‑venture operations,
– buying or selling counterparties,
– but also a thermometer of local demand for different asset classes.
Foreign Investment Regulation: A Filter But Not a Barrier
Since 2021, the Czech Republic has had a foreign direct investment (FDI) screening regime (FDI Act) in line with the European framework. The goal is to filter investments that could threaten national security or public order, particularly in sensitive sectors (defense, critical infrastructure, critical information systems, dual-use technologies…).
For commercial real estate, foreign investment screening is mandatory only if the target asset falls under specific sectors, like critical infrastructure (e.g., a data center). The majority of acquisitions of offices, retail, hotels, or logistics platforms are not subject to it. However, the Ministry of Industry and Trade can review a transaction retroactively within a five-year period if it identifies a risk.
Foreign investors can, if they wish, seek voluntary consultation to secure their transaction. In practice, the mechanism is still in a break-in phase: the number of complete procedures remains modest, and authorities emphasize cooperation with other member states more than systematically blocking investments.
In strictly real estate terms, there is no general restriction on property acquisition by foreign individuals or companies (outside sanction regimes). Mortgage registration, security interests, and the structuring of loans and leases follow civil law largely harmonized with European standards.
Where Are the Best Windows of Opportunity?
Aggregating all the data, several types of opportunities stand out particularly in the Czech commercial real estate market:
– Prime and core+ logistics: the risk/return profile remains very attractive, structural demand is strong (e‑commerce, industrial relocation, freight growth) and leasing fundamentals are solid, despite recent rent increases. Transforming regions (Ústí nad Labem, Olomouc…) offer interesting entry points, provided market depth is well analyzed.
The premium office market in Prague is characterized by a shortage of new supply and a low vacancy rate, leading to rising rents. This creates a favorable environment for core investors, particularly on well-located assets performing well on ESG criteria. A compression of yields is likely in this segment.
– Office value‑add and ESG repositioning: a large number of well-located but energy-obsolete buildings represent targets with potential, provided renovation costs are managed. Tenant demand for modern and sustainable spaces, combined with the scarcity of new supply, makes these operations particularly relevant in Prague and major regional cities.
In a context where retail parks are gaining importance, those that are well-anchored, with a resilient tenant mix and a captive catchment area, offer robust cash flows and yields superior to prime shopping centers, while often having more predictable capital expenditure (capex).
– Urban luxury hospitality: despite limited supply, recent large transactions show there is a deep market for upscale hotels in Prague. Yields are higher than in offices or logistics, with well-oriented tourist demand fundamentals.
– Diversified regional portfolios via funds: for investors wishing to limit direct entry risk or pool their exposures, subscribing to well-established Czech real estate funds can be a way to benefit from the market’s dynamism while leveraging local expertise and an advantageous tax framework.
Conclusion: A Market That Has Reached Maturity, Yet Still Rich in Potential
Commercial real estate in the Czech Republic is no longer a niche market. With investment volumes approaching or even surpassing those of larger Central European countries, a base of sophisticated and very active domestic investors, solid macroeconomic fundamentals, and sustained leasing demand in most segments, the country today offers a rare combination of yield, liquidity, and stability.
Facing challenges like inflation, rising construction costs, the ESG transformation of the existing stock, and increased competition for prime assets, it is possible to develop niche strategies. These can revolve around ultra‑certified logistics assets or refurbishment (repositioning) projects for office and retail buildings.
For an investor ready to work with local partners, integrate ESG imperatives into their analysis framework, and navigate a market where domestic players occupy a central place, the Czech Republic presents itself as one of the most interesting grounds in Central Europe for commercial real estate in the coming years.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
