A new market trend in mountain apartments

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A new trend in newly-built mountain apartments is emerging. These projects are defined by their high-quality architecture and boutique character.

They are situated in ‚forgotten‘ locations, forming a natural part of their village surroundings and are within walking distance of all the services a client may need. In addition to year-round sports and relaxation opportunities, they also provide their new owners with privacy and real peace of mind, a luxury which is rarely found in popular domestic destinations nowadays. It is these principles on which the Abertamy Platz project is based.

The project is located in Abertamy, a town in the midst of the mystical Ore Mountains (Krušné hory), which were recently listed as a UNESCO site for their uniqueness and rich history. The town is situated at the foot of the Plešivec mountain, with its modern ski area and trail park, and on the ‘Ore Mountains Highway’, an extensive cross-country skiing and cycling trail. On a renovated, picturesque square, stands a corner building, formerly operated as the legendary Uran hotel. The current owner, Residence Abertamy s.r.o., plans an extensive reconstruction here in the spring of next year to restore to the square and to the building their original charm and pride, but in a contemporary fashion. The Abertamy Platz project will offer 17 apartments, from studios to generously-apportioned, terraced duplexes. The amenities will include a sauna, bicycle and ski storage rooms, a lift to the basement, private parking in the courtyard and optional professional management of apartments with above-standard yields of 6–8%. The icing on the cake is the planned restaurant on the ground floor, which the locals are already looking forward to.

PR

Building and operational costs curbed

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Building costs in residential development increased over the past five years by about 50% with other segments doing a little better.

The way to cost reduction goes through quality initial concept, suitable selection of technical security of buildings and reliable construction management. Investor can save up to dozens of percent of the estimated project price in the planning phase and further savings can be gained if the development proceeds without appointing a general contractor. Construction management is frequently used abroad and is only in its infancy here in Czech. Nevertheless, the potential is enormous. Everything starts with a well thought-through concept, which leaves out unnecessary expensive solutions and detects possible negatives of the project and location at the same time. “And it is the beginning whereby one needs to consider a number of details and connections with the building phase as well as the subsequent operation of the building. Building costs, including the purchase price for the plot, makes up approximately one quarter of costs within the building’s lifecycle and the operation, maintenance and consequent reconstructions represent the remaining three quarters,” says Ing. arch. Karol Lakatoš, who leads the Design & Architectural team in the building and consultancy company OM Consulting, and continues: “It is necessary to choose the right construction system from the point of view of materials and processes. What is also important is co-operation between the architect and cost manager, a specialist for mechanical, electrical and plumbing (MEP) and a project manager. Within the framework of our company, we consult daily with colleagues from different fields, attempting to find the best functional and economic solution for the investor.”

MEP puts soul into the building

The role of the technical equipment of buildings (mechanical, electrical and plumbing – MEP)) is crucial in the concept phase. It decides on the quality of one’s stay inside the building and it also has a significant influence on the price of future operation. They say that a building’s nature lies in whatever comfort it can provide the user with. At the same time, comparable buildings (with regards to size, age and function) can have a million differences in operational costs per calendar year. The smart MEP can create high user standard at reasonable operational costs.

“We consider services in the area of MEP that fundamental that we earmarked an individual centre from our project management department. The centre comprises nine specialists who attend to MEP on a daily basis and gained their experience at many varied constructions,” says Ing. Karel Rod from OM Consulting, who leads this team. He himself has been through 30 years in the MEP field and participated, for instance, in the construction of the Nuclear Power Station Dukovany, a number of well-known shopping centres, administrative buildings and production halls throughout the Czech Republic.

Preventing unpleasant surprises

“If the MEP specialist is invited in time, he can find out in an early part of the project that the project is, for instance, planned in a particular dimension and cannot be connected due to an insufficient network of utility services to the particular plot. It is then up to the investor to decide as to whether to modify the project or invest in additional infrastructure. This prevents negative surprises in the phase that would already bring in extra costs,” explains Karel Rod.

What is characteristic for MEP, is a considerable number of various measurements that are carried out in individual phases of the construction. Operational costs then stem from the particular equipment of the building and the technics ability to assess the measurements and take subsequent measures.

Without a general contractor

Another way to reduce building costs is to replace the general contractor with an independent consultancy company – a construction manager, who takes on the management of the whole construction, tenders out to individual contractors, negotiates contracts and purchases the individual components and parts when necessary directly at the investor’s expense. The project abides by an agreed schedule and budget and regular assessment allows one to respond.

Savings for the investor

“Savings for the investor comes from unused co-ordination, risk and overhead surcharges and the general contractor’s profits. This tends to run between five to ten percent,” says Ing. Martin Hubač, Head of the Construction Management department at OM Consulting, and adds: “Construction management is also much more flexible when it comes to project modifications. Whether it applies to a change of material or a response to a future tenant’s requirements.”

If the construction manager discovers during the construction that some of the phases can be realized at more advantageous conditions, the saved resources remain in the investor’s cash box. If the construction proceeds with a general contractor, the building price is set by contract and is fixed. Each negotiation about change that is held once this contract is concluded is difficult and often leads to either increased price or a delayed deadline.

Construction management in Czech

“Construction management is a commonly used way of construction abroad. In Czech, developers are only just getting used to it. It is, for instance, used by Penta Real Estate, for whom we managed, as construction manager, the construction of the luxurious apartments Maison Ořechovka in Prague,” says M. Hubač.

“The work included the demolishing of a five-storey building and extracting a foundation pit. Since the foundation slab was laid and the rough structure was put up, we gradually arrived at client changes for individual apartments. The consultation of project documentation, the tendering of all contractors and management for the whole construction come as a matter of course,” states Martin Hubač.

Management demands

What the investor must count on during this way of construction is higher administration demand as it is associated with a greater number of contracts with contractors. This is further associated with the issue of guarantees and possible warranty claims. Negotiations with financing institutions is also more demanding as the final construction costs cannot be fixed in advance when utilizing a construction manager.

Ways on keeping costs curbed are clear. What is fundamental is to include a whole team of specialists from the beginning so that the preparation work proceeds in coherence. “Thanks to the size of the company and strong background from the specialists from other building segments, we can provide the client with a compact view and perspective. The possibility for immediate consultation and permeation of one’s knowledge represents a significant advantage towards our competition,” concludes Karel Rod.

JK / Photo: Penta Real Estate

Colliers International: How we made it through 2020

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How do we perceive this year at Colliers Czech Republic? According to Tewfik Sabongui, Colliers Managing Partner, the start of 2020 was filled with huge expectations, continuing our course in growing our business.

“In February, COVID-19 felt like a distant threat, something we believed was going to be contained in Asia. We were moving ahead with planning our MIPIM event and everything else. Little did we know. Like everyone else, overnight, we had to completely rethink our strategic approach,” explains Tewfik Sabongui and continues: “Colliers Czech was among the very first in our industry who allowed its people to work from home. A model which has always been supported, yet never fully tested, at least not to the required scale. They say, in every crisis, there are opportunities, and we had to tackle them. Instantly, all our teams were fully operational remotely. We conducted global and European surveys. We made it our priority to share the latest responses from all across the globe with clients. The past eight months are still a relatively short period to define clear trends, especially facing the start of the second pandemic wave, but certain things have been redefined, and will stay with us. Many meetings, negotiations and presentations can be done online, but the lack of physical contact is unthinkable. The feedback from a global survey answered by employees confirms the majority of us need to come to an ‘office’. It helps us be more productive, creative and engaged. So, will the office become obsolete, as many predict? Absolutely not! Occupiers may start looking for more flexibility, new solutions of how space is designed. Yet, an office will always be a destination where people come to socialize, work and be productive,” says Tewfik.

Office-single-point

Despite the difficult period, the Office Agency has been co-operating with interesting clients. “One of the new Czech market entrants has been Wrike, initially starting out with a few people. We found an immediate solution by providing flexible space in Business_link. Subsequently, we helped Wrike prepare a long-term plan for its gradual growth in the new building in DOCK IN Four, Prague 8, with a total area of almost 5,000 sq m,” says Petr Žalský, Head of the Office Agency.

With Colliers’ support, the world coffee producer, JDE, relocated from Smíchov to Skanska’s new ultra-modern Parkview building in Pankrác. The multinational pharmacists Alcon chose BB Centrum and its newly reconstructed building B in Prague 4. “For Fortinet, we recently expanded the office space in the Explora building in Nové Butovice area. We also secured modern offices in the Aspira office center for Mercedes-Benz Parts Logistics Eastern Europe. The company is very satisfied with both the new working environment and the location,” says Petr.

“We are especially proud of our work done for Mercedes-Benz,” highlights Lukáš Litera, Director of Building Consultancy, and adds: “The process started with a detailed workplace analysis steered by Colliers workplace advisory. An outcome of this exercise helped our architects design a space fulfilling all the employees’ needs.”

“All the clients above have used all three, or a combination of the related services we provide at Colliers: Design & Build, Project Management and WPA. And it was a pleasure to work with such important companies,” explains Petr.

Changing workplace

“This year, WPA assisted more than 10 clients during the last 12 months with the implementation of new ways of working. We helped companies such as Alcon, SAP, ZF Engineering, Clifford Chance, Edwards Lifesciences, Ferring, Mercedes-Benz Logistics Parts EE or HERO to re-desig their premises,” says Jana Vlková, Head of WPA.

A major long-term project of the WPA team is coming to life this year – UniCredit Bank is implementing its Smart Office at Filadelfie in Prague with Colliers’ complex assistance. This started with an analysis of ways of working, teams’ work requirements, completing with full assistance in change management communication.

Tomáš Drábek, Director of Retail and Private Banking at UniCredit Bank said about the project: “Our new Smart Office at UniCredit is interesting in the way it makes one feel at home.”

Property management

“The fight against a new challenge – the coronavirus pandemic fundamentally affected our activities in terms of financial planning, operational settings and technical measures that had to be applied to individual buildings,” says Matyáš Procházka, REMS, Director of the Property Management Department, and adds: “For this reason, we are very pleased that, despite objectively complicated circumstances, we managed to expand the portfolio of managed buildings by two interesting objects in the centre of Prague – the Albatros on Národní třída and the historic Spálená 21 building. The FID investment group proves that their owner, for whom we have also managed Slovanský dům, its flagship project for the fourth year in a row, is satisfied with our services and is expanding our scope of co-operation.”

Investment market: prediction

The Investment team are especially proud of this year’s Technology Park Brno deal. “We sold a 20,000 sq m manufacturing unit in Most on behalf of local developers to an international buyer,” says Andy Thompson, Head of Investment for CR and SR, and continues: “We also brokered the sale of the 25,700 sq m Grade A City West office building to CMN. Whilst investment volumes have cooled off, a number of off-market transactions are on-going. We anticipate that there may be more sales of distressed assets in 2021 across Europe as some sectors – especially parts of the hospitality and retail sectors – struggle as a result of the impact of Covid and the subsequent reduced demand from consumers.”

Valuation and advisory services

“This year will be another successful year with estimated valuations of approximately 150 properties from the office, I&L, retail and residential sectors, with value over EUR 7.5 billion,” says Vendula Maršová, Head of Valuations.

The team, amongst many other instructions, provides regular valuations for ČS nemovitostní fond, the largest mutual fund in the CR, managed by REICO investiční společnost České spořitelny, a.s. REICO’s sub-portfolio consists
of seven properties across three different countries totaling 166,200 sq m of gross leasable area and value in excess of EUR 500 mil. The team has three senior valuers, with the addition of another RICS qualified member this year.

Industrial & logistics

Colliers I&L team have been working with many end users including manufacturers, e-commerce and developers. The year 2020 has been challenging with massive disruptions in supply chains worldwide.

“We teamed up with a specialized company integrating Building management systems with the clients’ own internal systems. Having full data and power over the whole facility is helping to cut down on power usage, thus implementing savings,” explains Harry Bannatyne, Partner and Head of I&L.

“Our team has worked alongside over 20 clients this year with more deals ongoing throughout 2020. One deal we extremely value is helping Faurecia renegotiate (22,000 sqm) and expand their Czech operations (12,000 sq m) to ensure they received the best terms possible, mitigating risks where necessary. The Faurecia deal cements the great location of Nýřany and the trust of an International player successfully expanding its operations there.”

Informed decisions

In addition to our regular market reports, the Czech and CEE research teams were tracking trends impacting the real estate sector as a result of COVID-19. “So far, this year we carried out numerous online and in person meetings and presentations with clients to help them navigate these challenging times,” says Kevin Turpin, Head of CEE Research.

“This crisis was a good test for Colliers to show what the company and its people are made of, and I’m very proud of what I’ve seen. With expected changes in the pace of transactions and various speculations, we are still heading for another great year ahead of us. We are working with our clients, being supported by a great research team, providing the newest data and analytics to assist them in making the right decisions,” concludes Tewfik Sabongui.

Katarína Karmažinová / photo: Colliers international

The new technology eliminates the unwanted glass reflections

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A brand-new product offers more opportunities to architects and engineers designing museums, exhibition halls, shopping malls, VIP functional rooms and sky-boxes at stadiums as well as residential buildings with large glazed areas. This is possible thanks to CLEARSIGHT, the anti-reflective glass.

The new processing technology gives glass unique properties: a special anti-reflective coating reduces the light reflection ten times and makes the glass practically invisible. This innovative, environment friendly technology has been developed by AGC, the global leader in the flat glass production. “Glare and light reflections are not very popular with people arranging shop window displays neither with architects and designers who must take into consideration light performance and reflections. The standard flat glass reflects nearly one tenth of light therefore the objects behind the glass become less visible. This is the reason why shop windows in shopping malls as well as display cabinets in museums require expensive lighting installations. If Clearsight glass is used this becomes totally unnecessary,” explains Marcela Antlová, the building glass consultant from AGC Flat Glass Czech.

Excellent transparency and minimal reflection

Clearsight can absorb more than 99% of light and reflects back only 0.8% of it. This makes the glass nearly invisible. On the other hand, conventional glass used in shop windows and display cabinets usually reflects up to 8% of visible light. This phenomenon results in the mirror effect which is not particularly suitable for displaying goods or exhibits. Objects behind the glass are not clearly visible. If Clearsight glass is used objects can be clearly seen. When looking from outside Clearsight glass is highly transparent and reflects only minimum of ambient light. This is the reason why Clearsight glass is an ideal solution for such applications where high transparency and minimal reflection are required.

Clearsight – the anti-reflective glass is made from a highly transparent and clear float glass which allows more light to pass through so contrasts and colours are not distorted. Clearsight can be laminated, heat-treated and used in double- and triple-glazing for better insulation. When used in windows it provides outstanding transparency and it has optimal see-through quality. This see-through quality remains the same also at night thanks to the reduced reflection from the interior. Clearsight is produced with the anti-reflective coating applied to one side only or both sides (one-side/double-side coating). It is available in the large format of 600 × 321 cm.

Higher abrasion resistance

For the Clearsight coating AGC uses the magnetron sputtering technology. The glass provided with this coating is suitable both for exterior and interior applications. This type of coating also makes Clearsight more resistant against abrasion which is an advantage wherever the glass is exposed to frequent contact with people (museums, shop windows, display cabinets, etc.).

For more details contact marcela.antlova@eu.agc.com; www.agc-yourglass.com

PR / photo: ©AGC Glass Europe

Trendy offices, family housing and greenery

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Passerinvest Group belongs amongst the largest Czech development companies even though they are – with regards to their main operation in Prague 4 – actually a local developer and investor.

We were talking to Lenka Preslová, Business Manager at Passerinvest Group, a.s., about the supply of offices in Prague and demand for them as well as what the company is planning.

How do you see current supply and demand in Prague 4, which was and still is, attractive to your company?

The Prague 4 location – in our case I speak of the BB Centrum – does not lose its popularity even some years later. It is based on a stable foundation so I am convinced that it will retain this in future. It comes with an excellent availability of civic amenities and access to all services, which has become one of the most important criteria when selecting new offices. With regards to the fact that these things do not come up at once but are developed over the long term, the already established locations will always be an advantage over the newly developed or solitaire projects. New demands for premises are still coming even though we do note some decline due to the COVID-19 pandemic. The often-mentioned scenario regarding reduction of number of premises by companies does not show much yet but some optimization of the size of the premises will no doubt come up. there are also companies who are doing extremely well in these times and are looking at expansion. The currently reduced activity in the market is primarily caused by sitting tight and companies’ cautious approach to making strategic decisions whereby they tend to postpone them till later, once the situation calms down. With regards to supply, we have noted an increase in the volume of premises for lease. Based on the latest data from real estate agencies in Prague, the volume of premises for lease is nearing the 100,000 sq m level. The question is whether this segment will find suitable clients and to what extent it is to represent competition for the classic lease.

Where do you see the added value of the administrative buildings in the BB Centrum?

Administrative buildings in the market are now very comparable with their technical quality and specifications, so it is necessary to look for added value of a different character. With regards to the BB Centrum, it is, no doubt, its versatility of useful functions, a broad scale of services and civic amenities. BB Centrum today represents a fully-
-fledged modern city district, which we want to continue developing and improving. If I was to mention a particular advantage for tenants, it would be its large number and versatility of buildings, which allows us to provide various types of offices – from the smallest starting at 100 sq m in prime buildings to premises of several thousand square metres in modern glazed buildings. As lessor, we become long-term partners for companies and thanks to our portfolio of buildings, we can also respond flexibly and provide tenants with adequate premises, for instance for expansion, or to help them deal with reductions. We are aware of the fact that client’s requirements might change in time – especially in these times when added value no doubt gains on more and more significance.

What type of offices do your clients prefer?

We have all encountered terms such as activity-based workplace or agile workplace. However, the prevailing trend for our clients remains the combination of open and enclosed offices. With the emphases put on communal areas, mostly in the form of a common kitchen and with it associated seating areas intended for non-formal gathering of employees. What has also come to the fore in recent years are shared working places whereby the company establishes a smaller number of working places than the number of employees as they account for the fact that not all employees are continually present in the offices at the same time. And if they are, they can, for instance, use seating areas in relaxation zones. An interesting and more and more popular trend is also the trend of the utilization of mobile and flexible equipment, which can be easily relocated in case the premises need to be reorganized, without the need for reconstruction.

You have recently realized the comprehensive revitalization of the B building, which already has its first tenant. What is evident at first sight is the atrium that is open to the general public. How does it work at the BB Centrum with public areas and offer of services?

Public areas represent an important part of our approach to urban planning, where we develop an area comprehensibly as a whole and don’t only deal with individual buildings separately. That is the only way to create meaningful development projects that bring added value to both people and the city. Working environment does not only mean the area of the office anymore but also its immediate surrounding areas. That might represent an important factor for companies, for instance when gaining new employees. After repurchasing the buildings, working with public areas within the BB Centrum is easier for us and we are also happy for the positive feedback we get from those users who really appreciate the services provided within the complex. The last additions to the complex include the new Ellen G. White Square in front of the B building and the newly created inner block in this building, which is open to the public and complemented with water features, greenery and benches. The comprehensive reconstruction of Želetavská Street and the adjoining pavements and parterres on the ground floor will be completed before the end of the year.

Are you preparing some new projects in Prague next year and in years to come?

Our current project is the Residence Oliva, which is just prior to commencement. It is a prime residential building with 72 apartments situated within the location of the BB Centrum. We are pleased that there is a residential project ahead of us after all the administrative buildings. There is still significant demand for quality housing in the market and the lack of apartments in Prague has been a long-standing topic. I am also glad that we managed to fulfil our vision of the BB Centrum as not only a commercial complex as we also continue developing its other functions. During next year, we are planning the commencement of the development of the project Nové Roztyly, which is situated within the immediate vicinity of the Roztyly underground station and within the neighbourhood of Krčský Forest and which has been planned and anticipated for a long time. This area of an unutilized brownfield has been awaiting its premier for some time now. In future, there will be a new district with excellent transport access and with a broad scale of various functions such as housing, offices, shops, services and other civic amenities, including a nursery school and various sports grounds. After all, we have already managed to cultivate the four-hectare park with natural sports grounds, which now serves the general public. In the summer, we organised free of charge yoga lessons and early-evening runs through Krčský Forest.

What would you now recommend as the best offer from amongst your projects?

I firmly believe that all our projects may be included within the highest category from within a particular segment but the imaginary icing on the cake would be administrative premises, which are available within one of our iconic buildings – in Filadelfie. Since its completion in 2010, it was always nearly fully leased so opportunities for new tenants were limited. It hasn’t lost its exceptionality over the years and still offers exclusive and representative premises. The timeless architecture creates, in connection with amazing views, a unique combination. Moreover, we also decided to carry out an extensive facelift lobby for the main reception, which will now offer a pleasant environment in compliance with the latest design trends, including various types of seating and secluded places for meetings and gatherings.

PR

Apartments and houses with views of Prague and services

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One of the current projects by KKCG Real Estate Group, a part of the investment group KKCG, is the top‘ residence of Pomezí, urban housing with a park landscape in public areas as well as private gardens by the individual buildings.

We talked about the top‘ residence Pomezí in detail with Otto Koval, Business Manager of the company.

The top‘ residence Pomezí is at a relatively advanced phase. You have commenced work on the second stage. At what phase is the first stage and when are the first tenants due to move in?

The completion of the first stage of the top‘ residence Pomezí is planned for March 2021. The final detail on the facades are being completed in the case of all four buildings and intensive work proceeds in the interiors – laying tiles, wooden flooring and work by the locksmiths. Street lighting and the final pavement surface has been realized. The first apartments will be ready for handover at the turn of March and April 2021.

How many apartments are still left for sale and which type attracted most interest?

Almost all apartments from the first stage have been sold. We still have two smaller apartments and four larger ones of a penthouse type with roof gardens left from our offer. Flats that sold first were those with front gardens and all standard apartments with a view of Prague’s panorama or the natural park.

Won’t the construction of the second stage somehow restrict new residents?

When planning the construction of the second stage of the project, we tried to minimize the impact it might have on all residents within the neighbourhood. That is why we realized some of the infrastructure work in advance and will continue to do so. Construction of the housing blocks from the second stage, which are located within the immediate vicinity of those from the first stage, will be commenced in the spring of 2021 and their rough structure, the shell, will be completed in less than a year. The development of family houses that are to follow, with an interval of several months, will proceed behind a ‘barrier’ of these housing blocks. We plan to complete total construction before the end of 2023.

The second stage is of a more versatile nature with regards to the typology of the buildings. Can you describe it to us further?

The second stage of the top‘ residence Pomezí will offer a total of 59 well-appointed apartments, 38 terraced family houses and five exclusive detached villas. The urban project, which came from an architectural workshop, is a work by the Czech branch of the English studio Bogle Architects. The authors of the individual groups of buildings are, aside from this studio, the Austrian-Czech association of the studios Baumschlager Eberle & Hnilička architekti and majo architekti. The basic concept of the urban project for the second stage of the project is to retain its natural environment where the terraced houses and housing blocks are located and which will allow pleasant housing surrounded by greenery. The natural utilization of the shape of the terrain allowed for the creation of different garden levels, which will provide new residents with sufficient privacy, is only to intensify the panoramic view of Prague’s centre and the surrounding greenery. Realization of the part of the project that is important to us will be secured by landscape architect Štěpánka Šmídová with her team from the Šmídová Landscape Architects studio. Vegetation in both private as well as public areas will comprise the original grown trees as well as those newly planted. The park also includes two retention basins. We are also preparing a multifunctional and children’s playground and picnicking area at the bottom part of the plot.

All residential units and buildings are realized to a high standard. Prices correspond with this. What has the response been so far?

We have noted considerable interest in the apartments at the top‘ residence Pomezí, which certainly pleases us. We mainly attribute it to excellent location and quality of the housing offered. A few days after the sale of the apartments from the second stage had been launched, 20% of the apartments have been booked and others are subject to negotiation. At the beginning of November, we will release terraced houses priced from 20 to 36 million Czech crowns. These typical houses are displayed on the website and we are already negotiating with initial clients interested in this type of housing.

Which type is the most attractive for your clients?

Interest in the apartments is quite well balanced. We have successfully negotiated with clients interested in larger apartments such as 2- and 3-bedroom apartments with kitchenette, but the one-bedroom apartments also sell well. Most interest is, once again, shown in apartments that come with a view of Prague and/or with a front garden.

Are you also planning to offer services as you do in Šárecké údolí in the top‘ residence Pomezí?

Yes, we are, for this service is sought after by clients. top‘ residence Pomezí residents will also be able to use the services of the Chamberlain application, which is managed by the service company FM&S, being part of the KKCG Real Estate Group. Apart from the standard management of the housing blocks, they also offer the services of a handyman. The Chamberlain application will allow one to, for instance, arrange for cleaning and gardening services, a car wash, catering and others.

With regards to co-operation with renowned architects, your projects attract success in both local and international competitions. What awards have you received recently?

The first and second stages of the top‘ residence Šárecké údolí were awarded with the Public Award as real estate project of the year and the first stage then won second place in the Best of Realty competition from amongst the smaller projects; Bořislavka Centrum received several awards in the prestigious international competition International Property Awards, whereby the most significant is Best International Office Development; the first stage of top‘ residence Pomezí was awarded real estate project of 2019.

Bořislavka Centrum, which is nearing its completion, also belongs amongst successful projects…

The construction proceeds as per schedule even though with certain complications caused by COVID-19. Final building approval is scheduled for spring of 2021. Work on the facades and outdoor terraces is being completed, reconstruction of surfaces and the planting of greenery in the neighbouring streets is in progress and HVAC works in offices and retail are in full swing.

How do you manage to communicate with future tenants in these difficult times and what is the occupancy rate?

Some 96% of offices is leased. The lease of retail premises, which was well in motion at the beginning of this year, slowed considerably due to the coronavirus pandemic. Negotiations with potential tenants are lengthy as their priority is to maintain existing operations, which can be understood. Now, we have approximately 65% of income secured from the retail section of the project.

AK

Industrial development of the 21st century enters Ostrava

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P3, the developer and manager of industrial properties, continue in their successful business expedition in the Czech Republic despite the coronavirus epidemic.

The company has great plans for Ostrava, where they are preparing to develop a modern multifunctional zone of the 21st century in a remediated brownfield in Vítkovice. We discussed the epidemic’s influence on the operation of industrial real estate and company’s future plans with Tomáš Míček, Director of the Czech branch of P3.

We cannot but ask, in current times, about the influence the coronavirus has on your business. Did the epidemic scramble the world of industrial development?

Coronavirus mainly brought changes to practically everyday site of the industrial real estate operation but those are practically standard by now – tightened up hygienic measures, regular disinfections of premises and others. We still haven’t introduced any over standard overall restrictions due to the versatility of our customers, but we rather approach each and all of them individually.

Will this situation show up somehow in the long term?

Production and storage premises have an irreplaceable role within the economic environment and demand for them will continue growing over the long term and steadily despite the current crisis. We always conclude tenancy agreements for several years and do not feel any fundamental drop in interest in leasing. On the contrary, in e-commerce sector, we monitor a slight growth. We haven’t changed our plans regarding the development of new projects much.

Do you assess the year 2020 — at least its first half – as a successful year from P3’s point of view?

Certainly. Only in the first half of the year, we leased 170,000 sq m of premises, completed 77,000 sq m and commenced construction of a further 22,000 sq m, which we consider successful due to the general insecurity that has swayed through our society. We, for instance, welcomed XLMX, PPG Deco, Müller Technik and M. Preymesser logistika amongst our tenants, and also expended our co-operation with our existing tenants such as DHL, DB Schenker, Pet Center and Sazka. The project, which I no doubt consider pivotal, even crucial, this year, is the currently prepared development of the multifunctional park in Ostrava, which is being prepared at a brownfield in Ostrava centre, next to the Vítkovice complex.

Why did you decide to build in Ostrava in particular? What business potential do you see in this location?

From a business point of view, Ostrava is ideal. Following Prague, it is the second largest agglomeration with a sufficient amount of labour force and represents a strategic logistics and industrial junction from the point of view of the Czech Republic as well as within the framework of the Baltic-Adriatic railway corridor, through which some 24 million tons of goods come every year. This decision was also supported by the highly suitable plot available for this project – I believe that tenants will demonstrate enormous interest in the industrial park situated in the centre of the industrial town.

Can you outline details of the project? What tenant structure would you consider ideal for such a park?

Developers do not just come across such an opportunity on a daily basis, so we would like to approach the park as a multifunctional zone of 21st century standards, which would be able to provide something to practically every tenant, whether it is retail, logistics or light production. Within the area of 160,000 sq m there will be 1,500 sq m to 35,000 sq m units. Those tenants specializing in the technical area such as logistics and light production will mainly appreciate its excellent connection to the D1 and D56 motorways and the I/11 A-road, high-capacity utility services within the complex and the potential to utilize the railway siding. Retail tenants will mainly find attractivity in the flexibility of the smaller units which can be utilized for storage facilities as well as a store or showroom. With regards to the location in the town centre and its good accessibility by public transportation, we can say that the retail premises will be highly sought after.

What can the locals expect from a park in this location?

The main contribution to Ostrava lies in the fact that the forty-hectare plot, which hasn’t been utilized in the long term and was left fallow will disappear from the surrounding development. The whole area was remediated and now can be revived again. The state and Vítkovice Group did a lot of work with regards to the remediation and preparation of the land for development and I would like to give them my thanks for that. In order to respect the history of this region and make the park fit the surrounding development, we co-operated on the project with local architect David Kotek, who is responsible for the design of many civic buildings within the region and prepared an ingeniously simple design that impressed us and we hope that Ostrava residents will also like it. We are at the birth of a project which is to state the direction in which the industrial development is to head in decades to come. We really do look forward to that!

PR

We expect a slowdown

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The Prague office became a part of Bogle Architects in 2012 and has since mainly attended to projects in Czech and Slovakia.

The company is headed by Viktorie Součková, CEO, a graduate from UMPRUM, where she studied with Eva Jiřičná. Under her leadership, the architectural office’ studios produce various and often awarded luxurious residential as well as commercial projects. Their successful realisations include, for instance, the International Laser Centre ELI, the administrative building SmíchOFF, the residential complex Majakovského and the many times awarded buildings of Unique Staroměstská, both in Bratislava, and many others are under preparation.

We asked Viktorie about the current situation in the Prague office of Bogle Architects.

You were nominated for this year’s Building of the Year 2020 for your Šárecký dvůr project. Why did you enter with this particular project? And what other projects are currently being realized both in the Czech and Slovak Republics.

Šárecký dvůr is a unique residential project which very successfully combines historical and modern architecture. The project comprises two reconstructed immovable cultural sights and five new buildings, all well as being incorporated within the beautiful landscape of Šárecký Dvůr. We are currently working on the residential complex of Neugraf in Smíchov, Prague, and also offices and apartments at Astrid Gardens in Holešovice. Many other projects are under preparation. Worth mentioning is the Riverside project in Bratislava, the university building in Hradec Králové as well as the large multifunctional project in Prague 10 and many other projects, both smaller and large.

How did the ongoing pandemic affect your activities in the Czech and Slovak markets? Where do you see the main impact? How do you think the Czech real estate and development market be influenced by this unusual year?

None of our projects have so far been ceased. On the contrary. Everyone has, since summer, tried to catch up with what was not done between March and June, that is during the lockdown. We are working at full pace but we will wait to see what next year will bring. So far, I have only heard concerns about a slowdown. After all, we must realize that many people have lost their jobs during the pandemic and many companies from different segments are forced to deal with a lack of contracts. If people generally have less money, it will naturally have an influence on the real estate and development market. We will have to wait and see what influence. I think everyone expected ‘some sort of a slowdown’, which usually repeats over a ten-
-year cycle, but nobody probably expected the pandemic. Life and work will go on. We need to remain optimistic and look for new possibilities and opportunities.

Kristina Vacková

Keep calm, carry on and focus…

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This year’s Development News magazine has chosen project Early Learning Village in Singapore as the Foreign Building of the Year, the creative design of the British studio Bogle Architects.

The architectural and design studio, founded in 2012 by Ian Bogle, is receiving awards worldwide. The team consists of a highly creative group of individuals sharing a common desire to design and build progressive, imaginative and innovative architecture. They work outside the studios in London and Prague and has another office in Hong Kong. He works in a wide range of prestigious domestic and international projects. The main philosophy of Bogle Architects is simple design solutions that solve the complexity of any project. The philosophy of practice is based on clarity of thought, broad involvement and the process of design collaboration in order to achieve a common goal.

We talked to the owner of the company, Ian Bogle, about the feelings from the award Stavba roku 2020.

What was your feeling to know that you became a winner of Czech prestige competition Stavba roku? How do you value that price and what does it mean for your international company?

 It is always nice to win any award as recognition by your peers is the best kind of appreciation. We’re now active in over 20 countries around the world so international recognition is very rewarding. 

Early Learning Village, Singapore – the project which got also the price of Development news. What is specific about this project? Who stands behind, and how would you introduce the project?

The building is a ‘one of a kind’ as a project on this scale, for early years’ children, has never been undertaken before. We had to go back to first principles of how to organize the circulation and way the building would work. This lead to placing the youngest children at the top, slightly counter intuitively, and the oldest at the lowest floors to minimise travel within the building. The articulation of the building’s form was driven directly out of the need for shading and for external play space off every single classroom. The ETFE canopies allow for weather protection all year around as while it is always hot in Singapore it also rains a lot!

      

The year 2020 is very specific due to the pandemic. How does that unusual situation affect the company, and how further impact do you see for whole real estate market in the countries you are active at?

It has certainly impacted on the amount of international travelling we would normally do as a business. The difficulties for designers working remotely is the fact that it’s not ideal for inspiration and the spark of creativity that happens sitting around a table. Sure, remote working has its place but it certainly not the future for designers who need to collaborate face to face – and not over the computer! We’ve seen the impact on sectors we didn’t expect particularly international schools where the uncertainty of the yearly intake has had an impact on decision making. We’ve also seen the life sciences sector increase in popularity and indeed there are covid testing and investigations going on in one of our buildings at the Oxford Science Park. 

What another project would you like to mention? What are you working on at the moment? Are your current projects affected by the pandemic crisis and how?

From our London studio, we’ve currently just completed a residential tower in Bogota, Colombia, nearly finished another ground-breaking school in Dubai, UAE and finishing off some student accommodation in Porto, Portugal. We also have some interesting residential projects in London, designing some unique projects in Saudi Arabia and recently added a really cool project in France to our portfolio. I’ll let Viktorie describe what we’re doing from our Prague studio.

What is your personal motto when it comes to your business activities?

Keep calm, carry on and focus … oh, and never give up trying to improve!

Kristina Vacková / Foto: © Infinitude

Development is heavily taxed in the CR but the money doesn’t go where it should

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Developers’ fees for city and municipal treasury are nothing but a sector tax. That needs to be pointed out regardless of whether the developers agree with it or not.

This eventually always shows in the price of the product – apartments, administrative premises, storage and other buildings. What is, however, spoken little of is why this necessity actually originated. That is that it is about an entirely absurd replacement of money that developers and tax payers pay in taxes. Unfortunately, the money does not come from where it originates, that is into the budgets of relevant self-governments, but into the state treasury, which subsequently reallocates it unjustly and illogically. That means that the fees from development punish developers for poorly set budgetary tax assignment (RUD).

Absurd reallocation

We can demonstrate twisted the whole system is on an example in Prague. Development activities in the area of residential housing within the territory of the capital city of Prague achieved a turnover of approximately CZK 32.7 billion in 2019 (direct effect). As for other segments, this activity led to increased turnover by CZK 41.1 billion (indirect effect). Turnovers within the whole economy increased through paid salaries for work associated with both a direct and indirect effect by a further CZK 16.7 billion (induced effect). So, the overall influence of development activities in Prague reached a turnover of CZK 90.5 billion. In the case of added value, this represents an impact of CZK 30.6 billion. If we, however, look at information about nationwide tax collection in 2019, the elasticity of the individual tax types and the amount of stated numbers, we arrive at a shocking revelation. And that is that in 2019, CZK 14.2 billion was collected in Prague thanks to development and CZK 11.6 billion from that went straight to the state budget (that is more than 80%). CZK 0.7 billion went to the regions and CZK 1.9 billion to towns and municipalities. Prague, in particular, then gets approximately CZK 550 million from the total CZK 90.5 billion from the aforementioned tax collection. What can then be estimated in detail is the fact that this amount compiles CZK 198 million from income tax from natural persons, CZK 149 million from income tax from legal persons and CZK 198 million from value added tax. That means that Prague only got 0.49% back from the value that originated within its territory. And that is why they are looking to get money they could use for different purposes. Money for these were already paid via taxes but didn’t get where they should have.

How to get out?

The example that a well-set system can lead to correct solutions may be seen in Germany. Resulting from an analysis by the consultancy company KPMG is that a 25,000-sq m hall with 140 employees generates in Czech almost CZK 3 billion in taxes and insurance over 30 years; in Germany, it is over CZK 3.5 billion. But, whilst the Czech municipality gets CZK 15 million from the hall, the German one gets CZK 1.6 billion.

So, if we want to discuss the need of towns and municipalities in connection with their development, let’s not forget the basic issue: Developers have already paid their share in taxes. Dozens of billions of Czech crowns a year. Let’s not punish developers and their clients, ordinary residents of the apartments, people working in offices and logistics centres, warehouses and factories for a non-functional system, which relocates money absurdly. The right way lies in the direct interconnection of value in the place of its origin with the income of town and municipality budgets. Higher tax income for towns and municipalities could help pay necessities associated with their development and logically also improve relationship with townhalls and their representatives. And last but not least, they might, for instance, lead to a reduced price of apartments in the Czech Republic.

Tomáš Kadeřábek, Manager of the Association of Developers / photo: depositphotos