The recent flooding in Prague was big on drama, but surprisingly light on damage. People in this part of the world seem to be allergic to admitting that the state has gotten something right, but to a large degree, the flood control measures implemented and built after the horrendous 2002 deluge seem to have done the trick.
That being said, the post-event analysis will no doubt turn out lots of problems and shortcomings. One of the issues will be that new flood barriers definitely did the business as far as fighting a 2002-style event, but it turns out that each flood is different (shocking, isn’t it?). This time, with the rain advancing quickly from the north, the local creeks accounted for much of the local flood damage that occurred.
By now, most people will have seen the rather depressing aerial pictures of Crestyl’s DOCK project, a view that made things at the ongoing project look grim indeed. These fears seem to have been overblown. Crestyl’s director Omar Koleilat is quite relaxed about sending pictures from the site, and is even inviting us for a visit. Which we’ll of course take him up on. He explains that while there was obviously water in the underground portions of the scheme, the rest of the damage was thankfully quite minimal. We’ll go see for ourselves and report back. For now, you can check out the pictures.
These two shots are from last week, the day after the flood.
And these shots are from yesterday:
The days of constant criticism of the European Union from the office of the Czech president are coming to a close, as the CTK news agency says that none of the candidates to replace the eccentric Euro skeptic Vaclav Klaus next March is nearly so virulently opposed to the grouping.
In fact, that’s putting it mildly. Not surprisingly, the only candidate with anything that borders on an interesting or unique view of things is former prime minister Miloš Zeman. He envisions greater cooperation between the less powerful voices in the EU sticking together more to avoid domination from the big countries. Fight the man…At least it’s a decent premise.
But things go downhill from there. Another former PM Jan Fischer says that Czech national interests shouldn’t oppose EU interests, saying that security and economic prosperity are the most important issues.
And it doesn’t get any better.
Foreign minister Karel Schwarzenberg’s patriotism goes only as far as the rather obvious goal of preserving the Czech nation and language, and he performs logical somersaults by insisting that EU membership is the only way to achieve this. Meanwhile, the non-descript Premysl Sobotka espouses an unintelligible belief in controlling the national economy and foreign policy, in coordination with EU partners. This kind of inane babble makes watching paint dry on a wall sound exciting. Or vote for this guy.
In other words, as difficult as it is to say: Klaus will be missed (at least by journalists), and the era of interesting Czech presidents looks to be over. Which is perhaps as it should be.
Let’s just say the Czech public is a bit skeptical about property developers. This is a bit of political satire: a New Year’s greeting card for 2011 – 2014 from the “Prague coalition” of the Social Democrats and the ODS party…signed at the bottom “With the support of developers”. Of course, it’s as much a statement about the Czech view of politics and politicians as it is about the activities developers.
The credit committee of ECM Real Estate Investments has chosen to entrust the reorganization of the company to the development group Crestyl.
The reorganization of ECM REI was accepted back in March as the outcome by the courts of an insolvency process that had taken a year. Crestyl’s goal will be to minimize the impact of insolvency on ECM’s position and its properties.
Crestyl’s director Omar Koleilat said “This is a very interesting experience and I believe we’ll be able to complete the assignment successfully. We intend to work very closely with the credit committee and with the whole management of ECM.”
The option before the committee, and which was reportedly preferred by some, would have been to simply liquidate all the property of the company. The implication would seem to be that with a professional property company running the show, considered decisions on how best to proceed with ECM’s assets will be taken, meaning some properties may yet be developed in order to produce a greater level of return. Part of the deal is that ECM REI’s management structure will be changed, including the appointment of Koleilat as board member. ECM’s various companies will then be moved to Crestyl’s offices “in order to maximize the synergies of both teams.”
AkzoNobel is moving its Czech headquarters to Building Beta in BB Centrum in Prague 4. CBRE worked with the landlord (CBRE Global Investors) on the transaction, the company is due to move in on June 1. “AkzoNobel have taken advantage of the landlord´s current keen interest on leasing the available office space at Beta and have as such been able to lease good quality office space in a BREEAM certified building,” says Bert Hesselink, head of Office Agency at CBRE. Other tenants at the beginning include Marks&Spencer, Goodyear Dunlop Tires, Areva, Spar, Česká obchodní společnost and others.”
The German property fund DEKA Immobilien has landed one of the major transactions for 2012 in Prague, the City Green Court building by Skanska. The building hasn’t even opened yet, but it’s basically fully leased at this point, including a mouth-watering 10-year lease to PwC, which is abandoning its long-time downtown headquarters. City Green Court is the first office building in the Czech Republic to have been pre-certified as a Platinum LEED project. The transfer of the property will take place towards the end of the year, but will be recorded in Q2 2012. The transaction, in which CBRE represented Skanska, went through at a price of €53.7m.
Just a couple items. First of all, Bank Center in Budapest continues its fine run of form with an announcement that it signed up Qatar Airways, and that it had concluded lease renewals on 35% of its total leasable area during the third quarter. Over the last 18 months, in fact, it’s concluded deals (new leases and renewals) on 45% of the building. Current occupancy rate? 85%. Asset management of the building is handled by GLL Real Estate Partners, while property management and leasing is by Avestus Real Estate.
One other matter is a city planning issue in Prague, as the city’s mayor announced today that it was unrealistic to hope that construction would begin anytime soon on the planned fourth metro line. That’s not good news for anyone who was counting on Line D opening to commuters by 2020. Somewhat ominously, the mayor also said there wasn’t really enough money in the kitty for the completion of work on the A-line extension to the airport, but that work must continue.
At the end of the third quarter of 2011, Prague’s stock of modern office space stands at 2.77 million sqm, according to the Prague Research Forum. Of that, 68% is located in A-class properties, with class B making up the remainder. Half a dozen new office buildings were added (nearly 50,000 sqm) in the third quarter: Main Point Karlin, River Business Centre, Smichov Lyra, Centrum služeb Budějovická, Egon Business Centre and the renovation of Ehlenuv dum in Prague 1. Another 38,000 sqm is due to come on line before the end of the year. Take-up for QIII was down 49% from QII at nearly 50,000 sqm, while vacancy remained stable at 11.6%.
Finep has started sales of 67 flats in the third phase of its Prague 13 project British Quarter before even completing construction work on the second phase of the project. Prices begin at CZK 2.3m for units that begin at 45 sqm, ranging to as large as 118 sqm. “Since the start of the first phase in 2008 we have offered our clients 443 units, 80 percent of which have been sold and 67 percent completed,” says Michal Kocián, chairman of the board in Finep Holding.
Chalk one up for the activist groups. A court in Prague has stripped ECM’s scheme City Epoque of its urban planning permit thanks to a suit brought by local residents. The ruling is unlikely to please creditors of the company, whose huge debts forced it into bankruptcy. The V-shaped building was supposed to house 126 apartments, along with some penthouses that would have their own swimming pools. Like every single other project that’s ever been built in Pankrac, it’s been dogged by persistent local activists.
A very interesting story in yesterday’s Hospodarske noviny, which details some of the gory details in the collapse of Czech developer ECM. Its primary claim is the slide into bankruptcy began when the relationship between PPF and ECM deteriorated. Peter Kellner’s PPF had taken a 75% stake in their joint company called PPF ECM Holding, with ECM founder Milan Janku holding the remainder.
Janku’s own company ECM Real Estate Investments “never belonged to the joint company, but its method of financing was unacceptable for Kellner,” writes HN. It specifies a pair of bonds issued by ECM REI in 2006 an 2007 that brought in €54.8m but which had resulted in liabilities of €125.7m. PPF eventually refused to take part in the restructuring of these liabilities, and HN says the joint company eventually broke up over the issue. Continue reading
We’ll try to get a bit more detail on this deal, but CPI has bought a 50% share in Copa Centrum Narodni from Interco Holding. Copa retains its 50% share. Cushman & Wakefield represented the seller, but they’re unable to release any of the financial terms. Interco, based in Wiesbaden, appears to have been involved in the project since 2003.
“The opportunity to be part of a major scheme in the heart of Prague has proved extremely attractive to both potential tenants and investors,” said James Chapman, head of capital markets for C&W in Prague.
“We have seen a number of Central Europe’s more experienced investors look at prime development opportunities. This is due to healthy occupational demand and the ability of good projects to secure financing. We expect this trend to continue during the next twelve months.”