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Czech Republic

Since the great economic expansion began in the early 1990's, the residential real estate market has seemingly known no bounds. The growth has been practically limitless - one look across any area of town will tell you that.

To some the year 2000 was not a particularly active year in Prague's residential market but lead into a very upbeat 2001. The numbers of construction permits are up over the prior year according to the Czech Statistical Office leading everyone to believe that a residential boom is upon us. There are several reasons for this.

Housing supply in the Prague market continues to be outstripped by the demand. The mortgage market is becoming more fluid by the day as people - lenders and borrows together - learn more about the advantages of using OPM ("Other People's Money") when looking to buy a home or apartment. Pricing across the board has become more standardized, in some sense, as buyers have become savvier - traveling and seeing more seeing first hand the things they expect to find in a home. Likewise, builders are learning to design and build according to the tastes and expectations of their potential buyers. The competition, therefore, has gotten heated as developments vie for the same purchaser. The name of the game is now to sell "quality of life" rather than just another new apartment. High-density properties will fall out of favor while those providing lifestyle amenities will continue to draw buyer's attention.

Properties perhaps most often mentioned as the up and coming address in Prague include Villa Bianca, ING Real Estate's upscale residential community currently being built in Prague 6's most exclusive area, Bubenec. Villa Bianca gives to its resident's private, secure living in a location second to none. Amenities include outstanding landscaped gardens, secure, underground parking, individual storage in the garage for skis and a fitness room for those morning workouts.

Developer Karlov Most is the center of Prague's most significant developer. Buildings on Bilkova, Meislerova and Valentinska are setting new standards for housing in the center of the city.

What's ahead?

Others seen as moving ahead in the market are Engel Group and Afrika Israel. Engel Group has their sites set on several developments around town and is poised to become Prague's number one multiuse developer.

Areas such as Holesovice and Pankrác are also seen as up and coming markets. ECM is planning to incorporate residential living space within their Radio Tower development. This is bound to spawn increased activity changing the face of Prague 4. This was the case in the Prague 5, Smichov case. One look at the area surrounding ING's Zlaty Andel is proof that positive things can happen in areas once frowned upon.

Karlín has also seen the spark. With all of the current and planned commercial activity also comes residential development. The traditional adage "retail follows rooftops" has taken on complete role reversal here as residential development is following quickly in the footsteps of commercial and retail development. With the hotel and recreational developments planned it's only fair to presume that mid to upscale residential will have its place in Karlin.

Pricing

Property prices have seen no bounds as well. At one time, locals thought of Mala Sarka as completely out of reach and to some extent out of touch with reality. Now, with the advent of mortgages buying a property in any sector of the market has become affordable. Developers are working with mortgage lenders and see the value in having them on their team as their development and their marketing plans take shape.

The Rental Market

Over the last year or so there has been a glut of rental units coming onto the market. This glut coupled with the gradual slow down of incoming expatriate employees has brought about vacancy levels heretofore unheard of in years past. Rental prices of 30 to 40 German Marks per meter per month have been slowly coming down to the mid 20's to about 30 Marks at the highest level ($1,200 to $1,500USD per month for 1,000 sq feet apartment). This new tenant's market has also brought about concessions such as free rent and/or other enticements to get business. Orco Property Group, one of Prague's leading residential rental owners, offers concierge services including dry cleaning pick up and delivery along with other services to attract and keep tenants. Rental furniture is another newcomer to the Prague market that is starting to enjoy success as companies bring in new employees without the full move package seen years ago.

The villa or single-family housing market continues to benefit from a supply and demand imbalance. Houses closest to the American International School continue to enjoy high occupancies and higher than average rents. An additional Planned Housing Development complete with a fitness club for residents should help bring things into balance within the next 18 to 24 months.