Selling space in tough times

With a decade and a half of experience in the Czech Republic's property industry, Omar Sattar knows better than most how much the country's business sector has changed. While not blind to the downsides of operating in Central Europe, the proud Scot, who is of Pakistani descent, is glad a visit in the early 1990s as part of his university course eventually resulted in his move here almost 16 years ago.

As the Czech Republic managing director for Colliers International, Sattar is responsible for 17 people who run a business dealing in the rental and sale of offices and industrial space. Globally, Colliers has more than 12,000 people in 62 countries.

The Prague Post: What has the whole experience of working in the real estate sector during the economic crisis and subsequent recessions been like?

Omar Sattar: It's been quite educational, because you certainly get to see the error of your ways. To paraphrase what Oscar Wilde said, when the tide goes out, you get to see what everyone is wearing. It's been challenging, tough and educational. You probably learn a lot more when markets are depressed about people and companies than when they're booming. A rising market covers a lot of mistakes. A falling market exposes lots of cracks and imperfections. Real estate consultancy is hard work, but overall it's manageable and still enjoyable. We're still standing, and it's not the end of the world. Things can always be better, but they can always be worse. Are we billing as much as we used to? Of course we're not. Are we able to make a profit and get involved in exciting projects? Maybe not as many, but yes, we are.

TPP: What trends do you see in the country's office market?

OS: One trend in Prague and the rest of the Czech Republic - and this has been going on for the past 10 years - has been the popularity of the country as a shared processing center or business support center. With a lot of business support and back-office administration operations being consolidated, some businesses might locate these in Prague. You might have a European center, and that center could be in Prague or Brno or to some extent Ostrava. That's continuing. We're still seeing companies opening up in the Czech Republic. You see the same trend in Poland and Hungary. Labor costs are one reason; office accommodation costs are another. The ability to source people, many with a minimum of two languages, is a key attraction.

TPP: How has the market here changed in other ways over the time you have been here?

OS: The real estate expertise in the Czech market was not very mature when I first arrived in Prague, but as time has gone by, that gap has been closed. There is an equal amount of expertise among Czech nationals now. There's parity in expertise and experience there. You have excellent architects and people with finance acumen. These skills now exist; they didn't in the 1990s. It was wilder back then. I miss that point of view when anything is possible. The thing I don't miss is that getting people to buy into new ideas or ways to do things was a lot more difficult then than it is now.

TPP: How is the balance between local and international developers changing?

OS: I would say we have seen a change in developer profile. There are a number of active foreign developers here, but a very active [Czech] development scene as well. I would say the trend has been toward domestic companies making up a larger proportion of development projects. Quite often, you may see a foreigner at the helm, the guy might be British or American, but [the company] has been established here. There's a mix of them, and then you have the real Czech companies run by Czech individuals - a good example is Passerinvest. You also have the foreign developers, like at Skanska, and there are hybrids like Crestyl. There's a wide spectrum of developers here. There's more growth in the other two categories than there is in new foreign development companies coming here and developing. For example, currently you don't see development companies coming into the market such as U.S. firm Hines. Some foreigners have pulled out, like ING. They closed down their global development platform. Some smaller Israeli-owned developers have also left.

TPP: Why are international developers pulling out?

OS: There are a number of reasons. Some are due to a change in the company's business plan, in other words to get out of development due to the risks involved. Also, if the headquarters of a company is in a different country, be it the United States or France, and you have a crisis, they tend to concentrate on their core market, because of where the senior management is based. In countries like the Czech Republic, some feel there is limited growth because of the size of the country. Your focus tends to be on where you can make sufficient returns to survive and hopefully grow.

TPP: Although the sector has matured, corruption remains a problem in the Czech Republic. How much of a concern is this in your field?

OS: What annoys me most about business here is the feeling of unfairness and underhand activities, like corruption and backhanders. That totally frustrates me. It's an open secret: You can buy in work because you know the procurement person; you can build the MD a house or [buy them] a gold watch. You are asked to pitch, but the chance of getting some work is almost nil. It's not just in real estate. It happens with new IT systems in the public sector, with FMCG [fast-moving consumer goods], private and public sector corruption is clearly evident. People talk about it more in the public sector because politicians pick up on it. Where I come from [Scotland], it does not happen to anything like the degree here, and it's the exception, while here in the Czech Republic it often feels like it's the norm.

Daniel Bardsley can be reached at
business@praguepost.com