How has the real estate market evolved in last eight years? What did sellers do during this time? What is currently attractive in Prague real estate and which properties are the best investment? An article was recently published in Prague Post’s real estate magazine describing the development of Prague’s real estate environment in the eight years of Engel & Völkers’ existence in the Czech capital.
Prague real estate market for apartment houses and commercial buildings went through three significant phases of change since 2007. In comparison to Germany, Switzerland and Austria (with already seven years longing boom-phase), the Prague real estate market is at the slight beginning of an upwards trend with very favorable conditions for real estate investments.
The Prague real estate market of properties for mid-size private investments and developments between 0.2-20 mil € - apartment houses or commercial/office buildings went three phases by amount of transactions. Between 2007 and 2009, there were almost no transactions. This situation was caused by four reasons: sellers had very high price expectations, buyers could pay only low/realistic prices, banks didn't finance and final buyers of flats were missing. Between 2010 and 2013 a market situation started to be friendlier. Several single sales took place yearly, but often very slowly and with difficulties. Since mid of 2013 the market is coming up and it becoming step by step more exciting, but in the same moment it is not a place for cheap buys.
Prague residential and also commercial investments have the biggest catch–up in comparison to Munich, Regensburg, Berlin, Hamburg, Vienna or Zurich in several reasons. The most reasonable are Czech residential very owner-friendly rental-laws, low income and inheritance taxes, low average rents (usually between 4-8 €/m2), low average income (still around 1.000 €/month). Facts that many properties are still not reconstructed and exchange rate CZK in relation to € is very workable are also more than remarkable. Prague as capital of the Czech Republic with awaking market has still unique rates of interest which are very low.
In general there are 2 main investment strategies on Prague real estate market: 1. to buy properties with stable/potential rental income from the tenants or 2. to buy a property for development/reconstruction, and afterwards sell of flats (classical residential development). For strategy No.2 it is important to have a strong sales-partner, to manage a quick and complete sale of all units.
Engel & Völkers Prague office has eight years of experience on Prague real estate investments market with many successful deals. Track-record of Engel & Völkers office in Prague amount 800 million CZK in 2015 already transaction volume. With two teams of brokers, Engel & Völkers Prague provides an arrangement of right investment, and also offers a complete exit-solution for developers including complete sales-package for sale of flats: advice, pricing, marketing, legal service with a complete sales process. Its portfolio is based on the strongest German real estate broker with a worldwide network of 6.500 employees, in 650 offices, in 39 countries, on 5 continents. Engel & Völkers Group transaction volume amounted 10 billion € worldwide in 2014.
More information on www.engelvoelkers.com/en-cz/praguecommercial
Original text published in The Prague Post - Real Estate magazine you can read here