The NEMO fund, a new player on the Czech real estate market, has generated annual yield of over 5 percent. The fund reports rising revenues despite of the Covid-19 pandemics.
NEMO fund’s appreciation has increased 5.13 percent in the first year of its existence, which ranks it among the most profitable retail real estate funds in the Czech Republic. The fund specializes in investments into premium office spaces in the country, particularly in Prague. The fund has been established by Českomoravská Nemovitostní (ČMN), a real estate company.
NEMO fund focuses on investments into office buildings, which represent the most stable segment of commercial real estate. In its investment choices, NEMO prefers well-functioning projects with high-quality tenants and long-term leases.
“The fact that our strategy setup is correct has been confirmed during the Covid-19 pandemics. Our target performance is at about 5 percent. Despite some cooling-off on the market, our long-term plans have not been affected by the crisis,” said Josef Eim, ČMN’ Deputy Chairman.
The NEMO fund doubles the area of its portfolio properties
By the recent acquisition of the office building in Prague-Modřany, which serves as a headquarters of Nestlé, the fund has doubled the area of real estate in its portfolio. After 12 months of operation, NEMO administers assets worth CZK 1.3 billion.
“The attractivity of the fund has risen over the past weeks. The focus on office buildings prevented the fund revenues from sinking due to reduced tenants’ decrease in revenues, which was usually the case of retail spaces. Thanks to all this, office spaces are considered a safe haven for investors, as is confirmed by the current inflow of new clients. This clearly shows that the demand for investing into real estate funds among Czechs is on the rise,” Josef Eim explained.
Unlike other funds, real estate funds are in good shape
While equity funds suffered considerable declines, real estate funds weathered the crisis in a rather good shape, even reporting profit in numerous cases after the months of crisis. The reason is a specific nature of revenues, which makes these funds less vulnerable to the current situation than equity funds.
“The Covid-19 crisis has shattered the real property market, with negative effects likely to persist. On the other hand, the present situation is an opportunity for new purchases. That is why we are closely watching the domestic market,” noted Josef Eim.
It still remains to assess the impact of the pandemics on the real estate market as a whole. While economic downturn is expected, with results such as interruptions in rent payments, drops in real estate prices and corrections to property evaluation by some real estate owners, experts believe that office building market is likely to be well off with good promises for the future.
“The current situation on the market is complicated. Its impacts will be easier to assess only in the second half of 2020. It appears that the changes that are happening and that will be happening soon, will be beneficial mainly to the owners of rental housing properties, offices or storage spaces. The probability of the value remaining or even increasing is rather high, provided that all fundamental conditions, such as location, building quality and the quality of tenant relations, are met,” says Ján Zibura, Evaluation Department Manager, JLL, a consulting company.