The surging property market in Prague is great news for investors, says Laura Latham
Prague has been a popular destination for centuries, thanks to its beautiful architecture, café culture and creative atmosphere, but now people are flocking there for another reason. The Czech Republic is seeing some of the fastest economic growth in Europe, and that’s translating not only into commercial expansion but also a boom in property sales.
The country joined the EU just three years ago, but is already an established player. The rise of its tourist industry, alongside investment from multinational companies such as Sun Microsystems, IBM and DHL, has brought demand for residential property of high quality.
In Prague, where prices have been increasing at a rate of around 20% per year, the trends in development are all too obvious. Old Soviet-style apartment buildings are being replaced in people’s affections by shiny new builds, while much of the city’s beautiful historic property has been renovated into classy accommodation aimed at attracting overseas buy-to-let investors.
“Many businesses are finding Prague an attractive destination for reasons that include its central European location, strong economy and cheap labour costs,” says Jason Killingback of Churchill Properties Overseas, an agency that specialises in emerging markets. “With the development of Prague’s economy, it’s not surprising that the average wage for this city is 50% more than in the rest of the country as a whole. The Czech Republic’s growing economy has caused a small exodus, with citizens leaving the countryside in search of city wages, creating demand for rental properties.”
These new arrivals have been joined by overseas investors keen to cash in on the property boom in a city that, compared with other European capitals, is still pretty affordable. Average prices for a new two-bedroom apartment are around €1,400 per square metre in an area popular with local residents, such as Liben, to around €3,370 per square metre for a restored character property in a sought-after location such as Vinohrady or Smíchov. This means in outer areas of the city you can get a two-bedroom property for substantially less than €100,000, while in the historic centre you’ll be looking at upwards of around €200,000.
However, prospective buy-to-let investors should think carefully about location if they want to focus on long-term lets. According to Nathan Brown of local property consultancy Czech Point 101, although there’s a reasonable rental market for restored classical properties, it’s the contemporary developments that are getting all the attention right now. “The Czechs prefer new builds,” he says. “Given the choice of a 100-year-old building close to the centre or a new property in one of the suburbs, most Czechs would take the latter.”
Brown thinks this is partly due to the fact that locals were starved of new development through the communist era, but there’s also a feeling that the newer properties have more to offer in terms of interior design and facilities. Projects such as the prestigious Central Park Praha, which offers high-end luxury accommodation aimed at the city’s new breed of wealthy urban professionals, and Andel City, a multimedia complex containing a hotel and cinema alongside residential property, are good examples.
Margund Schuh of UBM Bohemia, the developer behind Andel City, concurs that new builds are selling well. “Newly built property, on average, has increased more in price than old, except well-refurbished places in special locations,” she says. Prices at Central Park Praha start at €130,000, while flats in Andel City – one of several projects by UBM Bohemia in the city – are selling from €140,000 for one bedroom. Not cheap by the standards of a few years ago, but still a saving on what you’d pay for similar properties in trendy locations within western European cities.
“I strongly believe that projects like Andel City have had a positive impact on the city’s atmosphere by changing an inner-city factory district into somewhere with a perfect living and working environment and a very good infrastructure,” says Schuh.
Not everyone is interested in buying for pure investment, but if your plan is to own a little pied-à-terre you rent out occasionally to weekenders, location is as important as the style of property. Most tourists don’t want to spend time trooping into the city from the suburbs, and will pay more to be in a good, central location. Nathan Brown recommends the districts of Staré Mesto, Nové Mesto and Vinohrady if you want the cream of the rental properties. “Areas a little farther from the centre but offering really good value are Holesovice and Smíchov,” he adds. “Zizkov is also an up-and-coming area with fantastic proximity to the centre.”
“Prague is divided into districts, each with its own number,” explains Jason Killingback. “Overseas investors tend to head for the central districts in search of buy-to-let opportunities. They’ll always prefer to buy a property in the centre of the capital, usually in Prague 1, 2, 3 or 5.”
Recently, Churchill had apartments in a new luxury block opposite a park in Prague 5 from €48,700 for a studio, and properties in a mixed-use retail and leisure complex in Prague 8 from €61,000. Czech Point 101 had a one-bedroom attic apartment in a pretty, restored heritage building in Prague 3 for €90,264 and, at the other end of the scale, a two-bedroom, two-bathroom apartment in a 19th-century building on the edge of parkland surrounding Prague castle for €449,729.
At the moment, the situation for buyto-lets isn’t too bad, with properties in good locations renting for around 4–6%, although Killingback claims some sought-after locations are seeing returns of nearer to 10%. Of course, making a good return depends on how much – or little – you originally bought for. “The run-ups in prices over the past 18 months have pushed down rental yields,” says Brown. “But we expect there to be continued growth over 2007.”
But if you’re thinking about buying into Bohemia, don’t leave it too long. Recent changes to make it easier for EU citizens to buy property in the Czech Republic have been welcomed, but they’re coupled with the news that VAT in the country will increase from 5% to 19% on 1 January 2008. This is predicted to cause a rush on the market in Prague this year, leading to further appreciation of around 20%. Clued-up buyers may be those who get in while the going’s good.
Key in the door
Czech Point 101 Tel. +420 774 440999, www.czechpoint101.com
Churchill Properties Overseas Tel. +44 (0)1983 550400, www.churchilloverseas.com
UBM Bohemia Tel. +420 251 013211, www.ubm.cz
Central Park Praha Tel. +420 221 199999, www.centralparkpraha.cz
Le bond en avant des Tchèques
La République tchèque a été classée en Europe comme l’un des pays ayant la croissance économique la plus rapide. Vu l’essor de l’industrie du tourisme et les importants investissements des sociétés multinationales, Prague assiste aujourd’hui à un boom immobilier sans précédent.
Les prix ont connu une augmentation de l’ordre de 20% environ par an et les anciens complexes d’appartements de style soviétique ont été progressivement remplacés par de nouvelles constructions flambant neuves.
Dans la périphérie de la ville, on trouve des biens à deux chambres pour bien moins que €100 000, tandis que dans le centre historique, il faut s’attendre à débourser grosso modo €200 000. Pour les propriétaires qui achètent de l’immobilier de rapport, les immeubles classiques représentent de bonnes perspectives, toutefois les Tchèques marquent une préférence pour les bâtiments plus récents.
On comprendra que durant la longue période de stagnation de l’ère communiste, les populations privées de nouveaux développements désirent pardessus tout des constructions récentes qui offrent aussi plus d’avantages en matière d’aménagements intérieurs et d’infrastructures. De nouveaux complexes immobiliers comme la Résidence Andel City (où des flats à une chambre sont estimés à €140 000) transforment également certains quartiers de la ville en parfaits espaces de vie et de travail, tout en proposant d’excellentes infrastructures.
Mais la localisation est un facteur essentiel: la grande majorité des touristes qui ne veut pas perdre de temps en trajets entre la banlieue et le centre ville, est prête à débourser plus pour un immeuble situé dans une zone centrale.
Mieux vaut ne pas trop tarder cependant. Même si récemment, des changements ont permis d’encourager les acquisitions de biens immobiliers en République tchèque par des citoyens de l’UE, de nouvelles législations prolifèrent en matière de TVA notamment, qui passera à 19% à partir de janvier 2008 sur l’achat des propriétés résidentielles. Les investisseurs avertis profiteront encore des conditions favorables actuelles du marché avant cette échéance.
Tsjechië in de lift
De Tsjechische Republiek heeft een van de snelst groeiende economieën in Europa. Door het toegenomen toerisme en investeringen van multinationals kent de Praagse immobiliënmarkt een heuse boom.
De prijzen stijgen er jaarlijks met 20 % en oude flatgebouwen in Sovjetstijl maken plaats voor gloednieuwe projecten.
Aan de rand van de stad vind je appartementen met twee slaapkamers voor minder dan € 100.000, in het historische centrum zijn die tweemaal zo duur. Voor wie op zoek is naar een woning om te verhuren, zijn er koopjes te doen met klassieke eigendommen. Maar de meeste Tsjechen verkiezen nieuwe gebouwen.
Een verklaring hiervoor is dat onder de Sovjets nieuwbouwprojecten verboden waren. Nieuwe eigendommen hebben bovendien meer te bieden op het vlak van interieurdesign en voorzieningen. Innoverende projecten zoals Residence Andel City (waarbij appartementen met één slaapkamer worden aangeboden voor € 140.000) veranderen nu stilaan ook de binnenstad in een perfecte woon- en werkomgeving met een geweldige infrastructuur.
Maar ligging is alles. Toeristen willen immers niet in de buitenwijken rond de stad verblijven en zijn bereid om meer te betalen voor een goede, centrale ligging.
Snel wezen is de boodschap. Hoewel het voor EU-inwoners gemakkelijker werd om te investeren in de Tsjechische Republiek, heeft men het nu al over een nieuwe vastgoedbelasting van 19 % vanaf januari 2008. Wie nog een graantje wil meepikken, wacht dus best niet te lang.
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