Top offices in Prague are bringing in. The NEMO fund brought investors almost 8% appreciation last year and plans to repeat the return this year

Specializing in cash appreciation through quality office buildings in Prague is paying off for the NEMO real estate fund. Last year, it brought investors an appreciation of 7.91% and increased the volume of assets under management by CZK 1.2 billion to CZK 2.3 billion. It plans to repeat the attractive returns this year.

The Fund's results benefited from inflation, which is gradually being written into the Fund's rental income through inflation clauses in contracts. Moreover, this trend should continue as economists expect inflation to remain very high for 2023.

The fund, whose portfolio includes buildings such as CORSO Karlín and Apeiron, also benefits from its focus on commercial real estate in the Czech Republic, especially in Prague. As a metropolis of pan-European importance, Prague is a place where major multinational companies want to be represented. In addition, there is a long-term shortage of quality office space in the capital due to slow construction, which causes an excess of demand over supply in this segment.

In addition to prime real estate in attractive locations, the diverse mix of nearly 100 creditworthy tenants contributes to the long-term stability of the NEMO fund - strong and credible brands such as Nestlé or Siemens are easily coping with the rising rent and energy prices they are now bearing in connection with office operations. Moreover, the fears of the first phase of the coronavirus pandemic that companies would permanently shift employees to working from home and reduce or eliminate offices altogether have not been confirmed in the Czech or European economy. On the contrary, face-to-face contact is still indispensable for their teams, so office vacancy in Prague remains very low.  

Another element that is gradually strengthening the stability of the NEMO Fund is its growing size. The volume of assets under management increased to CZK 2.3 billion last year, almost doubling. The number of NEMO's clients appreciating in value rose by a third to 6,000 last year. 

In view of high inflation, more and more Czechs became interested in protecting their savings against loss of purchasing power last year. Many of them then included NEMO in their portfolios thanks to its conservative strategy, attractive yield and focus on quality real estate assets in Prague. However, existing shareholders also increased their investments.

With the increasing capital from investors, NEMO is ready to expand its portfolio in 2023. However, it will not buy as fast as possible at any price, as some other funds are doing. Rather, it intends to continue to evaluate each opportunity carefully with an emphasis on stable returns for investors. This is what it did in 2022, when the Czech commercial real estate market cooled down because sellers usually offered terms that a prudent investor or fund could not accept. This year, however, experts expect the Czech office market to pick up, which could reopen the path closed last year for new meaningful acquisitions into the NEMO fund.