Savills reports that European commercial real estate investment volumes are forecast to grow by 13% in 2025, but Central and Eastern Europe (CEE) is expected to outperform this average, with a projected 32% year-on-year increase. The Czech Republic stands out in particular with a first quarter volume for 2025 showing €1.46 billion, already 79% of the full year 2024 volume.
Occupational market strength comforts investors
Stuart Jordan, CEO of Savills CEE, attributes this positive outlook to solid macroeconomic outlook with Polish and Czech GDP forecasts expected to sit in first and seventh places respectively in European terms: “Although global real estate fundraising in 2024 was at a 14 year low, domestic fund inflows in Q1 were very strong and this factor alongside lower year-on-year base interest rates should lead to increased transactional volumes. Real estate valuations are now better marked to market and acquisition opportunities are more abundant”.
Office sector shows continued strength
The office sector demonstrates positive trends, with physical occupancy rates increasing, and Prague ranking among the leading cities for the return of employees to office environments. The total office leasing demand in the Czech capital exceeded 630,000 sqm in 2024, underpinning strong fundamentals for investment in office assets. Stuart Jordan adds: "It was visible from our European Investor Sentiment Survey that the office sector has returned to being a more attractive acquisition prospect for investors, offering strong rental growth potential for best in class assets. With new office development being slow to materialise, a supply demand disequilibrium promotes rental level increases and positivity in yield movement."
Global financial flows shift towards Europe
Global financial flows in 2024 indicate a shift in commercial real estate investment towards Europe, which saw an increase of 14%. In contrast, the USA experienced a decline of 36%, and the Asia-Pacific region (APAC) saw a decrease of 17%. Given the current economic situation in the United States and the tariffs affecting most heavily Asian markets, further capital migration to Europe is widely anticipated to increase in the short term.
Strong domestic investment in the Czech Republic
In the Czech Republic, domestic investors dominated the commercial real estate market in 2024, accounting for 92% of total transaction volume. In the first quarter of 2025, Czech capital represented 72% of the investment activity whilst further outbound into CEE and Western Europe continues.