Nov 25, 2010

Ten Trends to Watch: Prague's Property Market

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. At Home Prague Manager Ulrika Ulhrova discusses 10 trends to be aware of in Prague's property market.

1) 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.

2) 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.

3) 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.

4) 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

5) If looking for property for an investment or as a rental property, there are new projects beginning to come online. You can inquire about renting or buying these Prague properties with our agency, At Home Prague.
  • New construction of energy-efficent residences in Prague 10-Strašnice.
  • A residential project in Prague 6, which will consist of 140 apartments, has just been awared best development in the Czech Republic for 2010.
  • A complex offering 28 "Finnish style" apartments, should be complete by the end of 2011. Located in Prague 10-Hostivař, the complex’s apartments will be 24 to 110 sqm.
  • On October 25, construction began on a residential project in Prague 3. It will include 124 apartments and is scheduled for completion in the first quarter of 2012

6) Commercial buyers are recognizing the excellent opportunities to be had in the real estate market and are enetring the market now. In November, the Czech Savings Bank (Ceska Sporitelna) purchased the Melantrich building, located in central Wenceslas square, for their real estate fund, REICO. This was the Czech Republic's third largest commercial real estate transaction of 2010. The fund manager, Martin Skalicky  said, "We believe that now is a good time to buy real estate,". The building is home to British supermarket chain Marks and Spencer. 

7) The Czech National Bank announced in September that apartment prices remain inflated and are likely to fall further

8) 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 are some of the lowest in Europe and the taxation system does not distinguish between high and low quality properties. The proposed adjustments would allow local councils to draw up land-value maps and base taxes on market value of the property.

9) Up to 8% of land in Czech Republic is owned by unknown parties. Land plots throughout the country have unknown owners primarily due to transitions in post-war Czech Republic. The communist regime temporarily halted the registration of plot transfers into land registries in 1951 and documents proving the likely ownership by Sudeten Germans are missing. 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.

10) Construction has begun on a 10 to 15 year development project, described as a “city within a city”.It is located on a 27 hectare plot on a site that formerly held the Bubny railway station. The project will include offices, apartments, a shopping mall, hotels, a hospital and university.

For more information on real estate in Prague, contact our office:
At Home Prague
phone: +420 222 233 233
mobile: +420 773 552 336

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