Prague's Property Market: Ten Trends to Watch
By Lindsay Grant
Prague's real estate market is rich with opportunity. Apartment prices in Prague are expected to decline and regulations on the purchase of property in Prague by foreigners eased significantly last year. At Home Network's Lindsay Grant explains these and other market trends.
The Czech Republic's Central Bank expects apartment prices to fall further, while new property developments slowly sprout up. In addition, the Czech government is pushing rent deregulation throughout the country. See below for the 10 trends to be aware of in Prague's property market.
- Last year, regulations on the purchase of property in Prague by foreigners eased significantly. Previously, foreigners had to establish a company through which to purchase property, but can now do so as an individual.
- Prague ranked second in a regional business attractiveness survey conducted by consultants Ronald Berger. Prague came in behind Vienna as the second most attractive location to do business in Central Europe due to its public transport, cultural environment and education.
- The Czech Republic is gradually deregulating rents throughout the country, although Prague and a handful of other cities have been granted a three-year extension in implementing the change. Most of the Czech Republic will see a full deregulation of rental prices by the end of the year. Rental prices will likely decline nationwide in the short term as previously regulated apartments flood the market.
- Residential Projects currently in progress:
- JRD, a low-energy apartment developer is managing the construction of energy-efficent residences in Prague 10 - Strašnice.
- The Kajetánka residential project in Prague 6, which will consist of 140 apartments, has been awared best development in the Czech Republic for 2010.
- Property developer YIT is scheduled to complete KOTI Hostiva?, a complex offering 28 "Finnish style" apartments, by the end of 2011. Located in Prague 10-Hostiva?, the complex’s apartments will be 24 to 110 sqm.
- On October 25, Metrostav began construction of Vackova Residential Park in Prague 3. It will include 124 apartments and is scheduled for completion in the first quarter of 2012
- Third largest commercial property purchase in Czech Republic this year: the purchase of the Melantrich building, located in central Wenceslas square and home to British supermarket chain Marks and Spencer. Ceska Sporitelna real estate fund REICO purchased the building at a price of 40 milllion EUR.
- The Czech National Bank announced in September that apartment prices remain inflated and are likely to fall further
- Jones Lang LaSalle reports two conditions that will continue to surpress residential sale prices:
- An existing oversupply of residential properties. Developers are cutting construction plans in order to stimulate demand
- A lack of improvement in the lending market, reducing demand for properties
- The Czech Finance ministry has proposed an increase on property taxes that would affect premium and luxury property. Current property taxes in the Czech Republic some of the lowest in Europe and the taxation system does not distinguish between high and low quality. The proposed adjustments would allow local councils to draw up land-value maps and base taxes on market value of the property.
- Up to 8% of land in Czech Republic is owned by unknown parties. lots throughout Prague have unknown owners due to x and x. Present law dictates that any real estate transaction be handled by the property’s owner, stalling any efforts to purchase the land. Legislators are seeking a resolution to this issue but have not made any agreements.
- Orco Property Group has started a 10 to 15 year development project, described by the companyas a "city within a city". The 'Prague Bubny' project is located on a 27 hectare plot on a site that formely held the Bubny railway station. The project will include offices, apartments, a shopping mall, hotels, a hospital and university.
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About the Author
Lindsay lives and works in Budapest, Hungary. She grew up living abroad and attending international schools in Europe and South America. Now she's keeping a blog about issues related to renting/buying property in and relocating to Central Europe. The blog is linked to At Home Network, a real estate agency assisting primarily expats in Budapest, Bratislava, Moscow, Prague and Warsaw.
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First Published: Dec 07, 2010