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Impact of Covid-19 on the real estate market is a hot topic. What is the situation of rental housing in Prague? Today, Ondřej Hlaváč, teamleader of the Engel & Völkers Residential Rental team, answers five new questions on current situation.
The biggest decline of rental prices were noticed in the center of Prague 1 and 2. The renovated apartment in the Old Town was usually rented at an average of 420 CZK / m2 in 2019. This price is in fact the upper limit for the most lucrative apartments today. On the other hand, prices remained stable in the inner center - in Prague 6 and 7. There is the long-term lack of apartments in Prague 6, the interest of embassies and moreover, there was only small amount of apartments that had previously been used for short-term rent. The price of a renovated apartment in a higher standard in Bubeneč is around 320 CZK / m2. It is not always possible to generalize the entire city district, let's take a look at Prague 5. Tourists left many beautiful apartments with a view of the Vltava River on Janáček Embankment (Janáčkovo nábřeží) and now they have been listed on the market. On the contrary, the market situation in Košíře remains more stable.
To be honest I'm not surprised by the tenants. Rents in Prague have only been increasing for a long time, after a long time the opposite is true. There is no one-size-fits-all advice, it always depends on the specific case. Sometimes it may be a good to insist on contractual terms, sometimes give a symbolic discount or a more significant one, for example when looking at tenant’s difficult life situation, and sometimes it may be a suitable solution to let tenant find a new home somewhere else.
First of all, flexibility, the current declining price trend of rental housing or the steady rise in purchase prices of real estate. I know many people who rent properties to live in, even though they own apartment buildings themself. There could be a number of reasons.
The main rental season was from July to mid-November in the past. The lockdowns in 2020 caused an important change, rental seasons ceased to exist. The deadlines for the reconstruction of real estate were extended. Suppliers failed due to closed borders. Another reason could be that entire factories abroad stopped producing components. Furnishing the apartments took three times longer, also thanks to the closed shopping centers. Last year we organized significantly more online property viewings, some clients sighted the lease contracts without visiting the apartment before. The situation in 2020 pushed some owners, whose properties were at that time vacant, to start with a previously postponed reconstruction. The competitiveness of the apartment plays a bigger role, for example renting an apartment in the streets with heavy traffic such as Legerova, Sokolská, Ječná or Radlická is much more difficult today.
I think that there will be a gradual return of growth in rental prices, but there is a phenomenon of inertia on the market. Whether tourism will return on a larger scale or not will be the most important thing, it also depends on the current restrictions in the world and on the local market, as well as on the coronavirus vaccinations, immersion and immunity of the population. During the last year, the market cleared up a bit out of oversupply of vacant apartments. If the pandemic scenario does not worsen, rents will return to growth by the second half of 2021.
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