HN: The tallest building in the Czech Republic will be completed by Metrostav and PSJ holding

    PRAGUE - Next week, a contract is expected to be signed between the development company ECM and the consortium of companies Metrostav and PSJ holding, which will effectively kick off the reconstruction of the tallest building in the Czech Republic. The unfinished skyscraper has been standing in Prague at Pankrác for several years. The contract worth 1.25 billion crowns is expected to transform the building into a luxurious 109-meter high administrative center City Tower by mid-2007. This was reported by today's Hospodářské noviny.
    The consortium of Metrostav and PSJ holding was selected by ECM in a tender. Other bidders included companies like Skanska and Hochtief.
    By mid-next year, the construction of the former Czechoslovak Radio should be transformed into the luxurious administrative center City Tower. The building will have 27 above-ground and three underground floors. There will also be shops, restaurants, and an observation terrace.
    "Offices in City Tower are already being rented for 13 to 19 euros per square meter per month," said Lucie Řítkošilová from real estate company CB Richard Ellis, which is responsible for leasing the building together with other companies. The most expensive offices will be from the nineteenth to the twenty-sixth floor. In contrast, the cheapest ones can be rented only up to the tenth floor.
    "It is certainly one of the significant projects in the Prague real estate market," evaluates the reconstruction of the skyscraper Philip Wood from the international real estate company DTZ Zadelhoff Tie Leung.
    All administrative spaces in the skyscraper - nearly 41,000 square meters - are currently available. "However, we are negotiating with several companies. If the negotiations end successfully, we will have tenants arranged for a quarter of the area in the coming weeks," stated project manager Petr Štyler from ECM in the newspaper.
    Real estate brokers believe that with the commencement of the building's reconstruction, interest from companies in renting offices will increase. The reason for this is not only the reconstruction of the skyscraper itself but also the surrounding area, where commercial galleries and residential buildings are expected to emerge by the end of the year at the latest. Additionally, the Arkády Pankrác shopping center will also be built in close proximity to the Pankrác project by the competing development company Rodamco.
    Compared to other European metropolises, Prague is still an attractive city for developers, HN notes. The Association for the Development of the Real Estate Market reported in its report that the return on investment in the construction of administrative centers here typically ranges from ten to fourteen years.
    Although returns from investment in such complexes have fallen from ten to seven to eight percent in the last five years, analysts say this is still one to two percent higher than in the cities of the union. In contrast, in Eastern countries - such as Turkey, Russia, or Bulgaria - the returns are higher, but there is also a higher risk of doing business. Thus, the Czech Republic represents a golden mean for developers.
    In Prague, there are about 1.6 million square meters of office space of European standards. "Approximately 13 percent of them are vacant," said Wood.