We learnt as we went along…

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The development company InterCora built the first shopping centre in Plzeň 30 years ago – and thus changed the culture of shopping. By now, they have been through more than 300 retail buildings and are building more. 

We talked about the early days of their business and visions with the founders of the company, Ivan Hlaváček (IH) and Dr. by Günther Zembsch (GZ). 

InterCora celebrates its 30th anniversary this year. Do you remember how it all started? 

IH: I can see it like it was yesterday. When my friend and business partner Dr. Günther Zembsch and I founded the company in 1993, it was a beautiful winter day and the euphoria of the newly acquired freedom was still in the air. 

How did you meet?

IH: I emigrated to Germany in 1981, we met in Bavaria, where I spent a part of my life and to this day, I like going back there. Günther and I started shaping the business vision even before the fall of the regime. The beginnings were not easy, because we were true pioneers in the market. We built the very first shopping centre in Pilsen – NC EDEKA in Lochotín. 

What challenges did you encounter?

IH: We were learning on the fly. I remember the opening of our first shopping centre. We laid beautiful ceramic floor tiles there and they were duly proud of it. When the then director of EDEKA came to take it over, he took a metal mark from his pocket, rolled it on the floor, and the coin bounced up and down, hither and thither. He said that we had to replace the flooring, that it had to be smooth so that the shopping trolleys would go well on it. So, we fixed it. We grew with every completed project. We started as a small office with two employees. Today, we have 75 colleagues, specialized departments and we are a retail market leader in the Czech Republic and Slovakia.

How do you look back on the 90s? What were the main impulses for your growth? 

IH: Those times and the first years of the new millennium were, in a way, a unique period that created ideal conditions for making all enterprising citizens’ dreams come true. During the transition to a market economy, the company wanted to catch up with the trends common in Western Europe, one of the symbols of which were supermarkets, where consumer goods were available all year round. A great number of state-owned enterprises, such as breweries, sugar factories or bus operators, ended or gradually declined with the era of socialism. Apart from standard projects, InterCora also focused on these brownfields, bestowing them with a new face. At that time, cities supported the sale of land and the development of services for citizens in every way and, together with the state, built the necessary infrastructure.

GZ: We also divided our roles then. While Ivan was in charge of project coordination and the running of the company, I concentrated on project finance by credit banks. It was a period of very rapid expansion, with the retail market developing and becoming saturated simultaneously. The times of almost unlimited possibilities are gone, but we still want to grow steadily.

You have over 300 objects on your account. What project are you most proud of?

GZ: What we consider a great success is the hybrid shopping centre in Banská Bystrica. For many years, we have been providing mezzanine loans based on the principle that if our creditor encounters problems with the realization of the financed object that he cannot solve by himself, we will take the object over and complete it ourselves. More than five years ago, we received, through an Austrian bank, a request from a Viennese developer for a mezzanine loan in the range of EUR 5 to 10 million. After reviewing the submitted documents, we decided to provide the mezzanine loan. Together with the financing bank, we reviewed the documents and found out that many of them were falsified, for example real estate cadastre documents, property ownership documents, etc. The project was very complex. It includes a central bus station, which is connected to the main station of the railway network of the Slovak Republic. The shopping centre is designed as a hybrid object, part as a shopping centre and part as a shopping gallery. It was not possible to foresee that the general contractor would become insolvent after about half of the construction volume was completed, so we had to reorganise and coordinate his subcontractors. It was only after the opening of the terminal bus station and shopping centre that we learnt that all our predecessors who had tried to implement the project had failed. This hybrid shopping centre, as well as the bus station, has been in operation for almost five years and represents our flagship in Slovakia. 

Which shopping centre did you complete last and how does it differ from the first one opened 30 years ago? 

IH: The needs and demands of customers have changed in the recent years and this has also been reflected in our shopping centres. Today’s shopping must be primarily an experience associated with, for instance, spending time in a cafe or restaurant. That is why relaxation zones and food courts come as a matter of course. We also try to support sustainable development, so we install photovoltaic panels on selected properties and allow customers to charge their electric cars in car parks. We are certainly not indifferent to the topic of the environment. 

What are you planning this year? And what do you wish InterCora on its birthday? 

GZ: We have two big events coming up this year. In cooperation with the city of Pilsen, we are completely revitalizing one of our older shopping centres in the Pilsen housing estate of Skvrňany. It is a technically demanding project associated with the demolition of the existing Penny Market store and other premises and the construction of a completely new shopping centre, next to which the city will build a park in the future. In Slovakia, we are planning to build a retail centre within the wider centre of Košice. On top of that, we are continuously developing several development projects that are still in the planning or permitting phase. So, there is still plenty of work. 

IH: On my and Dr Zembsche’s behalf, I would like to wish InterCora to continue to have enough projects and that work would bring joy and fulfilment to us and our colleagues.  

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YIT will start construction outside of Prague

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Despite negative economic factors, YIT’s turnover exceeded CZK 2 billion last year and they sold just over 200 apartments. 

Last year, YIT implemented the so-called prefabrication technology to a greater extent, new for structural elements. They are also intensively devoted to recycled materials and, according to the multinational strategy, continue to fulfil the set ecological goals. “Despite the turbulent development of the real estate market in 2022, we remain optimistic and expect its recovery this year. With the reduction of inflation, there should be a decrease in mortgage rates, which will contribute to the recovery of demand,” says the general director of YIT Stavo, Marek Lokaj. He adds: “Regarding new trends, we follow the growing interest in energy-saving housing and modern technologies, such as photovoltaic panels, heat recovery and LED lighting. They are therefore already part of our new projects.”

YIT’s balance in 2022

The developer’s projects of Parvi Cibulka with 150 loft-type apartments and Koti Libeň with 140 units underwent final building approval last years. Two projects reached the rough construction stage – the Vesi Hostivař complex with 208 apartment-type units and the Kemi and Ranua stages in the Lappi Hloubětín complex. As for new projects, in 2022, YIT commenced construction and sale of a total of 119 apartments in two projects – Rivi Bachova with 47 apartments and Happi Milánská with 72 units. 

YIT is planning development outside of Prague 

“We were unable to implement further development last year because the processes of obtaining a building permit were prolonged. However, we believe that we will manage to launch it this year. This applies to the two remaining stages in the Lappi Hloubětín complex and projects in Prague 5, 11 and 12 with a total of more than 300 apartments,” Marek Lokaj describes and adds: “As part of our strategy, we also focus on regional expansion. We are therefore preparing our first development outside of Prague, in Kladno, where we plan to build in stages approximately 800 apartments.” 

Expanding the use of prefabrication

To speed up and improve the quality of construction, YIT implements innovative prefabrication technology. “In some of our projects, we are already installing modular bathrooms that are manufactured in modern factories and brought to the construction site fully equipped,” explains Marek Lokaj. The developer has already installed 300 of such bathrooms. However, the use of prefabricated elements is now expanding further. Other prefabricated structural elements are also installed in the Happi Milánská apartment building.

Increased emphasis on ecology 

YIT tries to find new materials with minimal impact on the environment. They, for instance, introduced concrete construction from recycled aggregate, which will reduce CO2 emissions by almost 3% in the Vesi Hostivař complex. As part of the ESG strategy, YIT has updated their standards. “We already pay attention to the use of renewable resources and energy-saving technology when designing all our projects. From the very beginning, each of them has a so-called ESG card, where we determine the parameters and technologies suitable for installation in a particular project,” says the general director of YIT Stavo.

We develop the best logistics locations on the market.

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Logistics properties have long been in the background of market interest, but developments in recent years have highlighted their importance as high demand makes them a scarce commodity. 

We discussed domestic market trends, sustainability, new technologies and the importance of value-added services with Kateřina Březinová (KB) and Anna Jůzová (AJ), Leasing and Customer Experience Managers for the Czech Republic at Prologis.  

How would you describe the development of the domestic logistics real estate market in 2022? How was it for Prologis’ portfolio?

KB: 2022 was characterized by high occupancy rates, a tight market environment and rapid rental growth. Our Czech portfolio at the end of last year consisted of over 1,37 million sq m of space, 99% of which was leased. We see that companies are looking for facilities close to consumers, i.e., in cities such as Prague, Brno and Pilsen, which are our strategic focus. Over the long term, we have been successful in attracting strong local and global brands to these locations while enhancing relationships with existing customers. 

AJ: Our relevance is shown in a study commissioned by Oxford Economics, an independent consultancy, which was updated last year on request from our US headquarters. It showed that goods worth up to 12.1% of Czech GDP flow through Prologis warehouses in the country annually – this is the highest figure of any market in which we operate.

The demand for logistics facilities is high, but at the same time, there are very limited opportunities for new construction. How difficult is it for developers of your size to find new opportunities?

KB: We have been seeing this trend for a long time, and given that we used nearly all our land stock during the recent boom in demand for logistics properties from e-commerce companies, finding new development opportunities is currently one of our top priorities. At the same time, we will maintain our focus on only building in the best locations – the quality of our portfolio will always take precedence over covering the largest possible area. But we know that there are still opportunities; a great example is our Prague-D1 Ostředek park, which is currently under construction. 

Is it even possible to build speculatively these days?

AJ: Yes, even in the current market situation it is possible. We are speculatively building our park in Ostředek, which includes two new facilities covering an area of more than 33,000 sq m. We still have further construction potential in the area. Speculative development allows us to respond to increased demand in certain areas in the wider surroundings of Prague, helping us meet customer needs almost immediately.

Limited construction opportunities led to a significant year-on-year increases in rents over the past year. How was the situation in the Czech Republic?

KB: Last year was, without any exaggeration, a year of record rental growth. Rents in Prague went up by between 25% and 35% year-on-year, depending on the specific location of the park, the size of the space, and other factors. It should be noted, however, that over the past ten years or so rents in Prague have been stable at a lower level and have only now reached the level of other European capitals. 

AJ: At the same time, our research shows that rental costs are still a relatively small item in the operational costs of companies. Transport and labor budgets are far more crucial. That’s why we concentrate our development towards large consumer centers, so that our properties are conveniently and quickly accessible for tenants, their customers, and their employees. We also look for other, less obvious ways to make it easier and more pleasant for customers and their people to use our parks, for example through activities in our PARKlife initiative. We build sports fields and relaxation zones, organize events such as concerts, Christmas markets and summer ice cream tours, and much more. We’re delighted with the positive response these activities receive.

Sustainability is a key concept for development and for the supply chains of today. What are your initiatives and ambitions in this area?

KB: Sustainability is a fundamental pillar of our corporate philosophy, especially in the construction and operation of our facilities. It is a key criterion for our selection of construction materials and our building practices, as well as the installation of interior solutions. Since 2018, we have been subjecting all our new buildings to BREEAM certification, achieving very high ratings. Among other things, advanced LED lighting and remote energy monitoring systems come as standard. We are also installing heat pumps and, in some locations, retention tanks, while supporting electromobility by developing charging infrastructure. We are also preparing the launch of the SolarSmart program within our Essentials platform, which is essentially a marketplace for a wide range of operational solutions and products. Customers will be able to conveniently order solar panels in one place; we will take care of installing and commissioning, offering tenants a choice of financing options. All these steps help us achieve our long-term sustainability goals, which we have committed to by partnering with SBTi. We want to achieve net-zero emissions in construction by 2025, net-zero emissions throughout our operations by 2030, and net-zero net emissions across our entire value chain by 2040.

Are customers interested in advanced solutions such as robotic or automated systems?

AJ: Interest in automation is growing, especially as labor shortages persist. As consumer demand and the pressure to deliver packages on time continue to grow, companies are seeking ways to streamline their operations, both in new and older facilities. As the long-term owner and operator of our developments, we make sure implemented solutions are always relevant to our customers’ needs.

KB: Last year, for example, we modernized a building in Prologis Park Prague-Rudná, the oldest park in our Czech portfolio, for Zásilkovna. We developed a state-of-the-art distribution center to house 200 sorting robots. A recent development in our park in Chrášťany, on the other hand, is an example of a built-to-suit development that was intended to include robotic elements from the outset. We developed a 14,000 sq m space for e-commerce giant Rohlik.cz, equipped with the AutoStore automation system that is completely unique in the Czech Republic.

What major projects are you planning for this year?

AJ: We will continue with new developments, currently in Ostředek, and we will, of course, also develop existing parks to ensure a positive, friendly environment for the people working in them. We also see it as extremely important to further improve our Essentials platform, through which customers can equip their spaces with a variety of handling technologies, security solutions or robots at competitive prices. 

KB: We will also continue to develop services that go beyond the four walls and roof of warehouses, so that operations in Prologis parks continue to run smoothly, sustainably and in a community spirit.

Karlín Group celebrates 25 years in the market

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In 1998, Serge Borenstein began implementing his first residential projects in Karlín, Prague. Since the devastating floods in 2002, the district has become much livelier and grew more beautiful – this also being thanks to the development company Karlín Group. 

We asked the two current owners – the founder, Serge Borenstein (SB) and Jan Ludvík (JL), what has changed in the 25 years of existence of a company that prefers creative and timeless architectural renderings in its projects.

So, let’s go back 25 years, to the beginning… 

SB: Initially, the development company Karlín Group was significantly supported by the American investor Marc Rich, thanks to whom we were able to buy a large area of ČKD Holding. This is where the long history of Karlín Group began… 

JL: I started with Karlín Group shortly after that, 23 years ago, through a part-time job during my university studies. Some 10 years later, when I gradually reached a more important post in the company, Serge was dealing with a former business partner and also with the consequences of the 2008 crisis. That is when he approached me to see if I would like to help him start Karlín Group again and offered me a share in their upcoming projects. 

Can we briefly recall the history of Karlín Group? 

SB: As already said, we started by buying a large area in Karlín, which we concentrated on. From the beginning, our philosophy was to develop the urban area and at the same time mix functions in order to create a lively district. Real estate agents discouraged us from this model, because they claimed that it was impossible to combine residential and office segments, that people would not want to live there. We wanted to create a city that would live. I saw a deterrent example here in Brussels, where the administrative buildings for the European Union are built in the central part, which becomes deserted in the evenings. It is a challenge for every developer to be involved in the development of a large urban area. We got lucky right from the start, and I really enjoyed it. It is different than some solitary projects in the city. It was nice to see the city change. 

JL: It is not only encoded in the name of our company Karlín Group, but also in the projects we proceed with. Our portfolio mainly comprises residential and administrative buildings, depending on the current market development. What is important though is that apart from Karlín, we also continued to transform larger areas, which has developed into a relatively important segment of our activity, that is land development. Only few people know that we were at the beginning of some important projects such as River Garden or Libeňské doky. In these locations, it was necessary to consolidate the land, propose a new urban plan and obtain a zoning permit, with which we subsequently sold the land for realization to other investors. We have never had the ambition to grow into such a sizeable company that would be able to build everything we designed from the ground up. 

Do you have a stable team of co-workers? How many of you are there in total?

SB: Interviews sometimes speak about Prague developers, but the people behind those companies do not get mentioned. Since day one, I have been extremely fortunate to have worked with people who have created an excellent team, and whose initial enthusiasm persists. Our team now numbers around 30 people. It is important to mention them sometimes too, because they tend to be forgotten! 

JL: We keep our team this small on purpose, and we would like to keep it that way in future. Nevertheless, the flexible work structure allows us to work on several projects of different sizes at the same time. 

What projects are you currently implementing? 

JL: Now, we are working on about six or seven projects – from the smallest to larger areas. These are residential and rental projects in Prague, which have, after all, already been written about thanks to the partnership with PPF, but also larger city planning units, some with the aim of land development. We have discovered several interesting brownfield sites that are suitable for potential transformation. At the moment, we are, for instance, organizing an architectural-urban planning workshop on land in Chuchle. Karlín Group also made their first acquisition outside of Prague – in the premises of a manufacture of jointing materials in Libčice nad Vltavou. It is a brownfield site left after a former factory complex, right next to a train station. We are mainly preparing a conversion into housing, accommodation for the elderly and other civic amenities there. 

Does it mean you are moving out from Karlín?  

JL: It is difficult to find any more suitable land for construction in Karlín. And as we still enjoy our work, we looked across the river and found similar areas in Holešovice, where we are preparing one specific project near the exhibition grounds, and together with the Prague Public Transit Company, we are trying to transform the entire area around the vestibule of the Nádraží Holešovice underground station. The Railway Administration and CPI are also involved in the project as other significant local owners. We are preparing an international architectural workshop for this interesting location, which we could possibly realise before the end of this year. We have previously implemented one project near this location, at the intersection of Na Zátorách and Partyzánské Streets – the student housing project, which is now operated under the brand name The FIZZ and belongs to the International Campus Group. We would like to continue to develop similar projects in the future.

SB: But we have other activities as well. For instance, we support the So Concrete startup. After all, you could see it at the Festival of Architecture held at the exhibition grounds in Brno. It is a remarkable project and certainly a suitable topic for Development News. It is a combination of robotic programming, innovative concrete and the most advanced practices in construction. In time, artificial intelligence might design architecture and print it at the same time! 

Karlín Group is known for paying its attention to quality architecture. Which architects do you collaborate with on projects? Do you choose a particular architect for each individual project, or do you have some ‘court’ architect?  

JL: We select one for each individual project and in that context, we try to map the scene with both renowned and young architects. It is certainly no coincidence that many architects who worked for us in the past are better known today and have many more references than when we once approached them. They also used to be much more affordable for us then but today, we probably wouldn’t even be able to afford some of them! For instance, the Keystone building, where we are right now, was designed by the EM2N studio, which are generally very renowned architects in Zurich today. And I think that it was also this earlier realization of theirs that helped them to some extent. But there are some architects that we have been happy with and have great chemistry with, and with whom we have worked on multiple projects. However, I still wouldn’t call them court architects.

Can you name some?

SB: Certainly, the already mentioned Mathias Müller and Daniel Niggli from the world-renowned studio EM2N from Switzerland, Vasa Perovic and Matija Bevk from Slovenia, Baumschlager and Eberle from Austria, David Chipperfield or the recently deceased Ricardo Bofill. But there are also Czech architects with whom we have done several projects, historically with Šafer & Hájek, Pavel Hnilička and from the young architects with Under Construction; as for the younger ones – the aspiring ones – the Edit studio or perhaps Chybik & Kristof, who are far from being beginners by now. It is very interesting to watch those young and budding architects grow. For instance, Roman Vrtiška who worked on the first model apartment in our residential project Cornlofts Šaldova. 

How will you celebrate the 25 years of Karlín Group?

SB: We are preparing a summer event that will revolve around music. Besides architecture, music is another common passion of ours. With the Metronom festival, we will also bring the popular French singer-songwriter Zaz, who has already performed several times in the Czech Republic and sold out Forum Karlín three times. Since it will be in the summer, it will be a suitable kind of celebration, where we want to invite our business partners and friends. 

PSN is successfully implementing their residential projects in Prague

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Despite the complicated situation in the real estate market, PSN continues intensive implementation of their residential projects.

Their portfolio currently includes, for instance, four projects that are created via a sensitive reconstruction of townhouses and apartment buildings in attractive locations in Prague. They are suitable for private housing as well as a profitable and long-term investment. The developer also offers a more advantageous mortgage interest rate there. After the period of the coronavirus pandemic, during which apartments were still sold and real estate prices rose significantly, everything was affected by the geopolitical situation last year. Building materials became more expensive, energy prices escalated, and inflation started to rise significantly. The CNB raised interest rates and the unavailability of mortgages led to a decrease in demand and real estate sales. Despite this difficult situation, PSN did well – both in sales and with the preparation and implementation of new projects. The company fulfils their ambitious plans and continues to expand their housing stock with new apartments in the most interesting locations. They can satisfy the requirements of those interested in new housing and at the same time, they are also in the sight of investors.

Always in the centre of action

A more intimate living in the broader centre of Prague is offered by the Hanusova Housing project. A total of 18 small-sized bedsits and one-bedroom units are great for individuals or couples, but also as a profitable real estate investment. They are all awaiting renovation, so the new owners can modify them exactly to their liking. There is also a pleasant common area ideal for summer barbecues, for instance, being created in the garden within this low-rise building.

Between the Budějovická and Pankrác underground stations, where the apartment building is located, there is everything you need for a contented life – from a wide range of restaurants and cafes to shopping opportunities and sports fields. At the same time, it is not a problem to get to the centre of Prague in a few minutes by the underground. 

Practical apartments near nature

The Bydlení u Pekáren project is being developed in a quieter location with a family atmosphere. PSN is preparing 17 apartments with layouts ranging from bedsits to two-bedroom apartments, from which everyone can choose, in the popular location of Hostivař. Full-fledged civic amenities and varied possibilities for sports and recreational activities represent the biggest attraction of this district.

The generous shared garden represents a great benefit of this three-story housing block. Future residents can enjoy it quietly with a cup of coffee in its paved area and get busy with gardening in the unpaved parts. 

Genius loci of Břevnov

Those interested in purchasing their own home can also buy a new apartment in the lucrative district of Prague 6 with an unmistakable atmosphere. The very intimate Bydlení Na Petynce project was created in the area of the Petynka, Kajetánka and Malovanka estates from the 17th century, offering apartments with layouts ranging from bedsits to two-bedroom apartments, a maisonette on the top floor and a non-residential maisonette unit spread over three floors in the street of the same name.

The three-story apartment building in the style of geometric Art Nouveau matches perfectly the cosy character of the location situated about 2 km from Prague Castle. Excellent transport accessibility and a wide range of leisure activities come as a matter of course – there is the Ladronka Park, the Hvězda nature reserve or the premises of the Břevnovský and Strahovský cloisters near the project.

Living near Vyšehrad

In the prestigious Podolí district, PSN presents an interesting opportunity in the form of 21 residential units that will satisfy the demands of couples and individuals, as well as investor interest. The five floors of the Sinkulova Housing project offer units in the popular layouts of bedsit and one-bedroom apartments. The pre-reconstruction state allows for the interior to be individually finished according to the new owner’s style.

The housing block is situated in the middle of all the action, i.e. close to the busy centre, but at the same time within reach of the peace of nature. You can get to the centre and out of Prague, as well as for sports activities, with a snap of a finger. Worth mentioning are the local swimming pool, the Yellow Spa, the island of Císařská louka or the Vltava Embankment with its popular cycleway. 

Nová Waltrovka – the modern district of Prague 5 is getting clear outlines

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The generous Nová Waltrovka project, which is being built along the Radlická arterial road, is associated with the previous Waltrovka by Penta Real Estate not only the name but also the desire to refer to the history of this place.

The Nová Waltrovka project continues where the construction of the successful Waltrovka was completed in 2021. It should be noted that Penta was awarded the Best Multifunctional Development in Central Europe Award for the original Waltrovka. The district that they thus created comprises five administrative buildings and more than 600 apartments with excellent civic amenities, including a new park, a central square and a nursery school. Nová Waltrovka will now fill the remaining space of the original brownfield in the length of 500 m from Waltrovka to the ČSOB headquarters. There will be two modern administrative buildings with top class offices and space for retail, an international hotel and over 500 premium apartments. Connecting it with the original Waltrovka will create a modern Prague district that meets all current requirements for work and housing.

Construction is in full swing

The project by the architect Pavel Job from the Prague Ateliér M1 architekti is currently some halfway through construction. Completion of the entire complex is planned in several stages for 2027. The furthest point of construction has already been reached by two administrative buildings, Legatica and Metalica, which will be completed in the third quarter of 2023, and by the first stage of the construction of apartment buildings with 78 residential units, which is expected to be completed in the fourth quarter. The frame of the Zleep hotel is also complete. The second phase, which is to include construction of the largest number of apartments, will continue smoothly next year. Construction of the third phase should begin as scheduled at the turn of 2025 and 2026.

Brand new boulevard

While the administrative buildings of Metalica, Legatica and the Zleep hotel, which belongs to the multinational hotel chain Deutsche Hospitality, will line Radlická Street, the residential part will be concealed behind them. Therefore, future residents do not have to worry about being disturbed by the noise and traffic of this thoroughfare. In the future, the city management is considering pacifying this area, introducing tram traffic and diverting traffic to the Radlická radial tunnel. Radlická Street will thus become a modern boulevard, which puts emphases on urban greenery; at the same time there will be a brand-new wide boulevard with shops, greenery and relaxation zones located between the offices and apartments. The buildings will thus open up to retail areas from both sides.

A modern approach to the work environment

When it comes to office and retail space, Penta Real Estate plans to provide future tenants not only with notch technology and maximum flexibility of space, but also the opportunity to take care of their employees’ well-being. Apart from a unique view of the Vltava River, the planned community terrace also promises the possibility of being used for corporate events, such as joint barbecues or morning yoga. As for sportsmen and especially those who decide to choose a bicycle as their means of transport to work, there will be showers on each administrative floor and a bike room with related facilities. All areas will also be accessible to pets.

We also think about sustainability and impacts

Within the framework of the principles of sustainable development and ecological aspects, the construction, among other things, takes into account the retention and use of rainwater, the reduction of noise and smog by integrating suitable elements into the public space, the use of a sophisticated recuperation system, the elimination of the so-called heat island or the own production of electricity via solar panels on the roofs. Nová Waltrovka also takes pride in the WELL system certification. There is also a plan for equipping some parking spaces with an e-car charging system (their number can be increased according to clients’ requirements).

Non-traditional use of modern technologies

Previous covid years and measures related to this period are also reflected in the use of new technologies and access to services. Visitors to the lobby of new administrative buildings will not be greeted by a receptionist, but by a touch screen, and they will solve everything necessary themselves using a generated QR code and other simple applications. This will also apply to securing a parking space in the building and announcing a visit. The entire reception will then have a character of a serviced cafe, but in addition to perfect coffee, it will also be able to help visitors who resist modern technology.

Emphasis on community engagement

The project also accounts with extensive civic amenities that will connect to the network created within Waltrovka. Nová Waltrovka is planned with shops, services, restaurants with cafes or a sports ground. There are also negotiations being held with the town district regarding the establishment of a school, and Penta itself would like to renovate the historic foundry building, which represents a clear reference to the past of this place and could even find utilisation today. According to the plans, it should not only become the centre of the newly emerging square, but also the centre of life of the local community. The company’s involvement in the project is, among other things, also indicated by the fact that Penta’s project also includes ideas for improving the public space, which were proposed by children from the two nearest schools.

Will the half time whistle blow for Czech’s real estate investment market?

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Savills’ investment team provides consultancy in all areas of the real estate market, whether buying or selling. Experts from Savills are approached by funds and institutions, private investment companies, international and private investors and developers.

Our questions were answered by Fraser Watson, Director – Investment service, Savills Czech and Slovak Republics.

Can you summarise briefly how the real estate investment market performed in 2022?

To borrow a phrase from football commentators – it was a game of two halves! By the end of the first half of the year it was clear that the macro-economic landscape was changing radically and rapidly. With the final figures now in for the year’s transaction volumes standing at EUR 1.7bn (a 1% increase y-o-y), we note that just 27% of deals were concluded in the second half of the year. In a typical year the last quarter is the busiest as parties seek to conclude deals before calendar year end, however, in 2022 Q4 accounted for just 19% of the year’s volume.

What does that mean then for 2023? How will the investment market perform this year?

The over-used phrase of ‘price discovery’ is still very relevant for the Czech market and we see that the gulf in expectations between sellers and buyers still needs to be reduced. It may well play out that 2023 is another ‘year of two halves’, though the reverse of 2022, with muted activity until summer and an uptick in activity during the second half of the year. Despite the lack of current on-going deals, I think we could still reach an annual transaction volume of around EUR 1.5bn, i.e. just over 10% down y-o-y. The bottom line is, there are enough willing buyers out there and, whilst reduced in number comparatively speaking, we see enough deals underway to demonstrate that the market is still moving in at least some degree.

What’s behind this reduced deal flow? Is it attributable to any one factor?

It’s a good question. The short answer has to be ‘no’, there is no one single factor that could be pinpointed as the only reason for the reduced deal flow. A perfect storm of macro-economic events has dovetailed to bring us to where we are now. However, if pushed to give one thing that I think has had the most impact on investment market activity, I would have to say the increased (and volatile) cost of debt. With most investors using leverage to acquire assets, the speed with which borrowing costs have increased has caught the market off-guard. Buyers’ returns expectations are not met due to the increased cost of servicing debt, whilst simultaneously potential sellers are unwilling to accept the reduced price that is needed to generate the required returns for buyers.

What sector do you think is going to be the most transacted in 2023? And what buyer group will be most active?

For at least the last five years domestic investors have been the most prolific buyer group, taking at least 50% market share (by total volume) consistently each year (54% in 2022). In 2023 it is hard to imagine that this changes. The only caveat to that is if redemptions out of the domestic retail funds don’t rise to the point where Czech funds are more on the selling side of transactions than buying. We also expect European buyers to be active, which includes other CEE groups who have shown increasing regional activity over the last couple of years. Regarding the ‘most transacted sector’ in 2023, the safe bet would be offices, which have held that accolade for 5 of the last 10 years (including 2022, with 46% of annual volume share). For various reasons other sectors are unlikely to accumulate enough disposal volume to gain them the title of ‘most transacted’. What could change all of that would be a one-off portfolio disposal of significant volume, and we see that there is potential for that in the industrial sector in which a small number of owners hold a significant amount of assets.

The development of tram lines is experiencing an unprecedented boom

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METROPROJEKT Praha, a. s., has more than fifty years of history and is behind many important road structures, not only in our capital.

The new general manager, Ing. Vladimír Seidl, told us about the nearest goals awaiting Metroprojekt – and it is not just the D underground route in Prague.

 

At the beginning of the year, you replaced Ing. Krása in his post.  What tasks or challenges are ahead of you?  

My goal is for METROPROJEKT to continue to be a top project company, especially in the field of road structures. As for the closest goals, it is certainly the successful completion of the preparation of the group of buildings for the railway connection between Prague and Kladno and Václav Havel Airport. Obtaining zoning decisions and building permits in the inner city of the capital is a very demanding issue and a long process. We fight construction opponents, where they all support a modern rail link between the city centre and the airport, but only if the track does not run past their house or garden. Even excessive caution and sometimes not obeying by administrative deadlines on the part of the concerned organizations and municipal authorities do not accelerate the process. Despite the above-mentioned problems, we have lately managed, in co-operation with the Railway Administration, to start the implementation of our projects in the sections of Kladno – Kladno Ostrovec and Praha Bubny – Praha Výstaviště. As for the others, the Prague Ruzyně – Kladno section is closest to construction. Regarding METROPROJEKT’s internal processes, I would like to complete a comprehensive digitization of document circulation and the introduction of software for managing files, users and processes. My priorities also include further development of 3D design using the BIM method.

One of the main projects in Prague is the construction of the D underground route. Is it going according to plan, or have there been any guiles?

The schedule for the preparation and implementation of the I.D underground route set by the Prague Public Transport Co, Inc., is still being fulfilled. According to them, the Pankrác – Nové Dvory section should be completed and put into operation by 2029. Construction of the initiation section Pankrác – Olbrachtova has been in full swing since last April. A problem may arise if one of the participants appeals to the ÚOHS after the evaluation of offers for the implementation of the second section of Olbrachtova – Nové Dvory, as was the case in the first section. This might delay the opening of the first section significantly. As for the continuation of the project preparation, what I consider the right decision is for the DPP to focus on the continuation of the project preparation from Pankrác to the north towards Míru Square, because the C route will not be relieved until the D and A routes are connected.

How is the modernization of the existing underground stations progressing?

The rate of reconstruction of underground stations has increased in recent years, which pleases me not only as the director of a project company which considers this type of contract as one of the main lines of business, but also as a resident of Prague who regularly uses public transport services in the metropolis. Reconstructions that are currently being renovated include the Jiřího z Poděbrad and the C Florenc stations. This year, we want to complete the tender documentation for the selection of a contractor for the reconstruction of Českomoravská and Flora stations. At the beginning of the year, we also started work on the documentation for the building permit for the reconstruction of the Hradčanská station.

The development of tram lines is a relatively big topic in Prague. What is the topic of discussion is also the return of the tracks to Wenceslas Square, as well as new lines that are to improve transport services in the peripheral parts of Prague… What is the situation like?

The development of tram lines in Prague is experiencing a boom that I do not remember in my almost thirty-year professional career. The outgoing leadership of the capital has set this as one of their priorities, and I believe that the new one will continue the established trend. The implementation of the Holyně – Slivenec construction will begin, alongside the ongoing Modřany – Libuš and Divoká Šárka – Dědinská constructions, in February. Our company is now working on the projects of Libuš – Nové Dvory, Kobylisy – Bohnice tram lines and the new line in Počernická Street. The return of trams to Wenceslas Square is one step closer. It is perhaps the most visible of all our aforementioned projects. But it also of a great operational significance, as it is to create a parallel route to the busiest I.P. Pavlova – Ječná – Karlovo náměstí line. Even a banal collision in this section can nowadays complicate tram traffic in a large part of the city. At the turn of the year, the building permit for the track on Wenceslas Square took effect, and a competition for the selection of a construction contractor is currently underway. There I must point out that we were able to obtain a building permit in record time, also thanks to the generous support of the city management, and I would like to thank all my colleagues who were responsible for this.

So far, we have only focused on Prague. Which of your projects are implemented outside the capital?

The tram line from Osová to the Masaryk University Campus in Brno was put into trial operation last December. It is our largest completed urban transport system project in recent years. The track runs for the most part in a tunnel, and the Zelená brána underground station is part of it. Reconstruction of a historic station building in České Budějovice is underway. METROPROJEKT’s largest ever foreign contract – the third underground route – is being implemented in Sofia. There I can only envy my Bulgarian colleagues the speed of the permitting processes. In 2010, we commenced project work on two new underground routes, the D route in Prague and the third underground route in Sofia. In Sofia, there are already 12 stations out of a total of 18 in operation. The D route in Prague, on the other hand, was only commenced last year.

Your answers show that METROPROJEKT focuses mainly on rail structures. Are you going to focus on other transport construction systems, or possibly other construction industry?  

I was already involved in the expansion of METROPROJEKT’s portfolio in my previous position of a sales director. Every company is able to resist crises better if it has so-called more open scissors and if it is able to assert itself in other areas outside of its core business. One thing is to get a contract in a field that is not traditional for you, and another thing is to handle it successfully with one’s own capacities or with the help of subcontractors. No one wants to associate with you much when trying to break into a new market, because you increase their competition and take away work as a result. The only option is to get recognized experts in the new field. Attracting them to employment is conflicting and almost impossible today, so we took the route of acquiring smaller established companies with which we worked on joint projects in the past. Over the past three years, we have managed to acquire majority shares in PK Ossendorf and AGA – Airport, thus entering the market for designing road, motorway and airport constructions. As for the future, I do not rule out that we will also continue in this way in the segment of designing building constructions.

ČSOB reduces their carbon footprint, thinking about nature and clients

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Companies address environmentally friendly behaviour and sustainability more frequently these days. ČSOB is one of the first banks that took sustainability and environmentally friendly behaviour very seriously and it is part of their strategy.

According to Josef Šedivý, executive director of FAM ČSOB, sustainability is a natural part of the company’s philosophy. This is also proven by the fact that experts rate their Prague headquarters and the new building in Hradec Králové among the hundred most ecological office buildings in Europe; moreover, these buildings have received several different awards – for instance Best of Realty, Green Roof or LEED Platinum certification. Sustainability and support of diversity represent the way in which companies can be beneficial to society and allow future generations to maintain the same standard of living as we know today. Josef Šedivý says: “Our main goal is to create conditions that are in harmony with the environment and sustainability. We want to be a good neighbour for people and nature and to open up more to the public. We behave ecologically not only in our internal operations, but we also support our clients in this: we search for and support long-term sustainable projects and give clients the opportunity to invest in companies that minimize their activities’ negative effects on the environment. We have been helping corporate clients for a long time in their search for business transformation solutions towards sustainability and innovation.”

Prague headquarters belong to the top in sustainability

The rise in energy prices makes companies look for savings. At ČSOB, they are ahead of time – it’s already been three years since they started consuming electricity only from renewable sources, when in 2019 it was only 68%. Therefore, they leave no carbon footprint with the electrical energy consumed in this way now. Daniel Rubricius, Director of FAM Buildings ČSOB, comments: “We are constantly working to reduce the energy consumption of all bank branches and headquarters. Energy consumption also decreases due to our new modern ecological buildings. ČSOB Campus in Radlice, Prague, is one of the most ecological buildings in Europe. It uses geothermal wells both for heating and cooling, and there are more than 300 trees, 3,000 bushes and one hundred climbing plants growing on the roofs, which are watered by a self-irrigation system with rainwater.”

There are also several charging stations for electric cars and electric bikes in the garages. Lukáš Cerman, director of FAM Development ČSOB, adds: “We are aware that the cars we operate contribute significantly to our CO2 footprint. For this reason, we support electromobility. Our company fleet currently includes about 20 electric cars, for which we operate and build charging stations. In general, we reduce the number of vehicles, try to share them efficiently and gradually start to move away from internal combustion engines. Our vision is to have a fully electrified vehicle fleet by 2030.”

The new building in Hradec Králové is one step ahead

The recently opened regional headquarters in Hradec Králové meets the strictest ecological standards. There they also use heat pumps and energy from the earth’s massif, achieving exceptionally economical operation. It is yet just another proof that ČSOB really takes environmental protection seriously. There is even a well there. It could therefore be said that when it comes to energy savings, they achieved the possible maximum. “There is always more that can be done, and the search for savings in reducing the energy demand of buildings is a never-ending process due to the constant emergence of new technologies and innovations,” says Daniel Rubricius, and specifies: “We will focus more on the use of air conditioning systems for both cooling and heating. During the heating season, we will lower the internal temperature and continue the installation of photovoltaic panels, which we started three years ago.”

It is more complicated in the regions

However, ČSOB branches are not only based in modern buildings with top technologies. Their own as well as leased premises have been undergoing continuous optimalization for several years now. The total number of branches generally has a downward trend, where the main effort is to reduce their area. It is a consequence of digitization and the development of the way of servicing clients. Reducing the number of branches or reducing their area represent savings in operational services, including energy, and thus also reducing the carbon footprint. “We strive for a sustainable and ecological approach in all objects, even though it is not easy in some of them. LED lighting, MaR systems and energy-saving cooling and heating technologies come as a general standard. Another area we gradually focus on is photovoltaics. We currently operate photovoltaic power plants on the roofs of our buildings in Zlín, Břeclav and Blansko, having a total of 52 panels with a combined output of more than 16 kWp. We plan to gradually increase the number of solar power plants,” concludes Lukáš Cerman.

New ‘City’ to grow in Prague Airport vicinity in the future

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It is among the fastest growing airports in Europe in its category. It employs approximately 3,000 people, while another approximately 15,000 people work for companies operating at or near the airport.

Václav Havel Airport Prague is on its way up again, after the Coronavirus pandemic, and thinking about the future. The largest international airport in the Czech Republic is getting ready for the development of air traffic and at the same time wants to make the most of its further potential.

The airport and its neighbourhood are a great area for investment

Prague Airport was at its peak before the start of the global pandemic. In 2019, it handled almost 18 million passengers and looked forward to further growth. Now, after three years significantly affected by the pandemic, better times are again in sight. Last year, the airport handled almost 11 million passengers. This year, also thanks to the resumed routes, it should exceed the 12.5million mark. More than 60 carriers will offer direct flights to more than 165 destinations around the world, including popular destinations such as New York, Seoul, Dubai, Istanbul, and Doha. In addition, more than 8.5 million people live within a two-hour-commute of Václav Havel Airport Prague, which represents considerable potential.

Prague Airport is therefore focussing not only on the development of airport operations and increases in its capacity, which is to be ensured, for example, by the expansion of Terminal 2, but also on the development of opportunities not directly related to passenger handling. This is precisely the goal of the Airport City programme, which is designed to contribute to greater economic stability of Prague Airport in synergy with the surrounding area and its development.

An important international airport near the centre of the capital city of Prague offers a great opportunity for investment. The area surrounding the airport is compact with an already existing Airport City core, which has a great potential for further development.

Airport City North

Václav Havel Airport Prague envisages further growth in the number of handled passengers, and therefore wants to expand the range of its services offered. As part of the land use study, Airport City North is divided into three basic zones: CENTRE, SERVICE, and BUSINESS, and a fourth supplementary arrival zone, GATE. All zones are interconnected, and in terms of operating, directly and indirectly connected to the airport terminal buildings.

The study anticipates new development in this area of the airport, with the solution concept focusing on complementing the existing infrastructure elements with a well-arranged development featuring a clear ‘street’ block-based pattern and central axis. In terms of operation, alongside the direct support for passenger handling processes, the objects are to house additional services for passengers, the public, and employees. New administrative premises, hotels, parking buildings, a congress centre, and other commercial venues are also to be included. New and existing greenery and public spaces are to be appropriately and proportionally used across the area, while the concept aims to create a local sub-centre of an urban character with the dynamic airport traffic at its centre.

In the first phase, the construction of a new parking building B and hotel facilities is planned in this area. BNP Paribas estimated in its 2018 study on future hotel capacity demand that the offer in the vicinity of Václav Havel Airport Prague was low compared to similar airports in Europe, with 27,000 passengers per hotel room compared to 5,000 passengers in Warsaw. The airport plans for the nearest future therefore include a three-star hotel with a capacity of up to 200 rooms.

Key milestones for Airport City North comprise the expansion of Terminal 2 with a new Pier D and at the same time the launch of operations of a railway line and a station right beside the terminal buildings. Public transport is used for trips to the airport by approximately 30% of passengers and members of the public, who currently use busses. Recently, the construction of the electric bus line has commenced, while the railway connection to the city centre should be in operation close to 2029. The airport is also easily accessible from the Prague ring road and the D7 motorway, of which capacity increases are planned by the Road and Motorway Directorate of the Czech Republic.

Airport City South

Airport City South is divided into three basic areas. The south part of the site represents great potential for Aviation Business offering enough space for the construction of new hangars, terminals, and logistics centres.

The Dlouhá Míle area is also part of the Airport City South development plans. Currently, it is a partially urbanized area that began to develop with the establishment of the airport. There are several administrative buildings, dormitories, apartment buildings, and healthcare facilities. The airport goal is to complement the zone turning it into an urban sub-centre benefiting from the railway station and commercial infrastructure.

The Area South is very closely linked to the existing and prospective urban development within the territory of the Prague 6 municipality, and the relationship between the airport and the city in this area will continue to deepen in the future as the city moves closer and develops more intensively towards the airport. Concurrently, the airport will create and integrate new capacities, including commercial, within the area.

An area of open ‘campus type’ complexes with adequate block-building structure is proposed in the central zone of Airport City South. Its open arrangement aims to support more flexibly structured premises with capacities for research, education, specialised production and, to a limited extent, administration. Operations located in this area can optimally connect to and commercially benefit from the airport infrastructure proximity and aviation activities.