Czech Real Estate: Unchartered Territory
by Larissa Petryca, on 13 September 2021 11:00:29 CEST
Last week, Dean of the School of Business, Dr Stefano Cavagnetto, gave his keynote address at IBF’s annual Residential Real Estate Seminar in Prague. The seminar brought together leading professionals from residential and commercial real estate and construction, legal and accounting fields to examine the current state of the property market.
Dr Cavagnetto presented research and data from the EU Commission showing the unprecedented impact that the pandemic has had across all sectors of business. After examining and discussing economic consequences the seminar narrowed it’s focus on the real estate sector and post-pandemic investment environment.
Covering key areas
Panelists represented key areas within property. Director of Lexxus Peter Višňovský presented on the strong Czech residential real estate market, Chief Development Officer for Sekyra Group Igor Klajmon spoke their large-scale commercial and residential projects underway in several city precincts. Faical Orakzai, Chief Customer Officer from Easy BnB covered the short-term rental market which unsurprisingly has monumentally crashed in Prague.
Partner, Lars Klett from UEPA advokáti explained the new Construction Laws that are due to come into effect within the next 12 months and Pavel Kliment – Partner, KPMG spoke on recent commercial property transactions that have continued despite the pandemic.
For real estate investors and developers, the news was good. Both residential and commercial sectors continue to grow in price as the demand for property continues to rise.
There are several reasons for this:
- Investors are increasingly turning towards domestic markets.
- High residential housing demand continues to outstrips supply.
- Short-term rental properties are now long-term lease properties - investors, so far, are holding on.
- Despite many continuing with home office companies were still in need of office space, banking on a percentage of employees returning to the office full-time with some mixing work from home with occasional office.
- Construction materials have increased by 50 percent since 2015.
- Antiquated construction law ensures that development permits lag behind the rest of the EU.
As a direct result the current Prague average for residential is 120czk/sqm which is not expected to drop but climb higher. Both the pandemic and rising prices in the centre have also affected prices outside of Prague with properties within 60 minutes commute of the city rapidly increasing in value. A clear message from the seminar was that if you can afford to buy real estate, do so now.