Plzeň – an excellent site for investment in Czech real estate

posted 16 Sep 2018, 06:21 by Conbiz Info Center   [ updated 16 Sep 2018, 06:22 ]

Bottoms up! Plzeň – an excellent site for investment in Czech real estate 

The Plzeň (Pilsen) Province in the Czech Republic

The Plzeň Province borders Germany to the west and is famous thanks to the Plzeň beer manufactured in it. The province includes 7 regions : Domažlice, Klatovy ,Plzeň-město Plzeň-jih, Plzeň-sever, Rokycany, and the Tachov region.

The Plzeň province is renowned as the leading industrial zone in the Czech Republic, a role it fills thanks to the plentiful natural resources in the province, including clay and limestone from the quarries of the Šumava foothills. These natural resources have transformed Plzeň into a site for foreign investors, and many have established factories there.

The region also has a flourishing tourism industry. One of its chief destinations is the Barthomuleo Gothic Cathedral from the 13th century, which includes a 135 meter tall tower, the highest tower in all of the Czech Republic. An additional site are the historic tunnels in the Old City, which stretch underground for over 20 kilometers, one of the most extensive tunnel systems in all of Europe.

In 2015, Plzeň was selected as the cultural capital of Europe by the European Union. 

The city of Plzeň 

The city of Plzeň is the capital of the Plzeň province, and the hometown of the famous Pilsner beer. It is only an hour by car from Prague and is the fourth largest city in the Czech Republic.

The city holds the largest Beer Brewery in the Czech Republic (Pilsner Urquell) and the largest distillery in the country (Stock). Both are major attractions for tourists who visit, learn of their illustrious history and, of course, sample their products.

However, Plzeň is more than a mere provincial capital. It holds some of the best masterpieces of Gothic construction in Europe. Perhaps the best known example is the St. Bartholomew Cathedral, with the tallest Church Tower in Europe. An additional attraction is the Grand Synagogue of Plzeň , the third largest Synagogue in the world. 

Plzeň is also home to several fascinating museums, including the West Bohemian Museum (which holds the oldest collection of weapons in Central Europe) and the Brewery Museum.

The City of Plzeň holds most of the schools, businesses and factories of the province, and they are undergoing constant expansion. For example, there are plans to expand the famous Skoda factory in the city.

As of 2018, the University of West Bohemia, and particularly the Faculties of Law, Mechanical Engineering and Sciences holds some 20,000 students, who live in the dorms and residential neighborhoods of the city.

Real estate prices in Plzeň are about a third lower than Prague, and the return on investment on residential apartments in good neighborhoods range between 4 – 6%.

Are you interested to hear more about real estate investments in Plzeň ? Please contact us

Private home prices in the Czech Republic are on the rise

posted 1 Sep 2018, 23:31 by Conbiz Info Center   [ updated 1 Sep 2018, 23:32 ]

Private home prices in the Czech Republic are on the rise 

Many Czechs spend their weekends and vacations in village cottages and in vacation homes, which are considered an inseparable part of life in the Czech Republic. Nonetheless, those who seek relaxation from the din of the great cities must now invest far more efforts than was previously the case.

In fact, the rise in apartment and home prices in the Czech Republic has also spread into the private home market. According to the data of the CeMap Company, the prices of private homes rose by 20% over the past year. The highest rises were registered in the Vysočina and Zlín regions (a rise of 40%) and in the Liberec region (a rise of around 30%).

Experts believe that this rise derives from, among other things, the rise in real estate prices elsewhere in the Czech Republic. Residents who therefore cannot afford to purchase private homes elsewhere or apartments in the cities turn to these regions instead, driving up demand and therefore the price as well. In addition, in spite of changes to the mortgage regulations in the Czech Republic – the private homes still enjoy accessible mortgages provided that they be populated year round.

The highest number of private homes (cottages and vacation homes) in the Czech Republic can currently be found in Central bohemia, which reflects the fact that their owners are Prague residents that are not interested in vacationing far away from their homes in the weekends.

However, this proximity does not adversely affect the quality and most private homes in the Czech Republic are of the highest quality, requiring no renovation. The reason for this is simple – the Czechs do not want to work hard in their weekends in the village and just want to relax. 

Want to learn more about reak estate in Czechia? Click here

Changes in Czech Republic Mortgages 2018

posted 26 Aug 2018, 06:07 by Conbiz Info Center   [ updated 26 Aug 2018, 06:07 ]

Changes in Czech Republic Mortgages 2018

In early October 2018 new regulations will come into play in regard to mortgages in the Czech Republic. The Central Czech Bank published an official announcement that the purposes of these regulations is twofold: preventing the generation of a real estate bubble and preventing the development of future problems in the financial system that might be caused by the granting of mortgages that are higher than the ability of the mortgagees to repay.

Following the changes undertaken in April 2017, the Czech Banks are relying more and more on the LTV parameter – (A loan in accordance to the value of the real estate) and they are demanding that it be under 80%. In other words, that the bank will fund no more than 80% of the value of the real estate as it was assesed by a certified appraiser or the bank.

The Czech Banks still have the option of providing more than 80% mortgage, but these mortgages cannot be more than 15% of the bank's loans portfolio. What this means is that banks will be more careful when providing mortgages. Up to now, the remainder of the property value had to be provided from other resources they possess (mostly self-capital). The attempts to bypass this regulation with other loans (such as loans by other banks), will no longer be accepted by the Central Czech Bank and contradict the new regulation.

The new change

In practice, from now on two additional criteria will be considered during the handling of the mortgage application by the banks (In the event that this is a couple or business partners who apply for a mortgage, these values will be set by joint calculations, in other words values which take into account the repayment ability of the different applicants).

  • DTI (Debt relative to income) – this parameter considers the debt (Mortgage) relative to the yearly net account. The bar in this case is 9, so that the maximum allowable debt is the yearly income times 9.
  • DSTI (Mortgage debt relative to income) – this parameter calculates the monthly mortgage payment relative to the net income. The bar here is 45%, which means 55% of our income must remain in your hands after paying the monthly mortgage payments.
The Czech Republic is not a pioneer in these regulations and a similar integrated system also exists in Slovakia, Austria and the Netherlands. However, this system is usually not as widely used in the states of the European Union.

It is important to know that the new regulation is not mandatory but a recommendation

The new regulation is not mandatory, and no bank is obligated to follow it to the letter. They are, however, obligated to provide the authorities with an explanation in the event that they fail to implement it. As a result, the final decisions of the banks in regard to mortgages will be in the framework of a triple calculation. In other words, if the mortgage applicant does not meet the requirements of the DSTI, the bank will probably demand a low LTV value or else reject the application completely. In other words – if the mortgage is over 45% of the income, the bank will probably finance only a very low percentage of it, if at all.

What is the reason for the change in the regulations?

The Czech National Bank has derived lessons from the last crisis in 2008 and is interested in preventing future problems. While the Real Estate market is heating up in various parts of the Czech Republic, and particularly in Prague, the banks fear a domino effect in an extreme scenario where the economy freezes, the unemployment rate rises, or many real estate assets are put on sale. However, many experts claim that there is no cure for the heating up of the real estate market in recent years.

What are the implications for the real estate market?

One of the ramifications of this regulation is that certain clients, particularly those with low wages, will not be able to receive high percentage mortgage, or any.

According to Jan Frait, the department head of economic stability in the Czech Central Bank, only 7 - 8% of the mortgage applicants will not meet the demands. On the other hand, other experts claim that 25 – 33% of the clients will be affected by this regulation, primarily youth who are purchasing an apartment for the first time.

Jiří Kryl of the BrokerTrust Company estimates that as the new regulation will result in rising demand for more remote and less central, and therefore cheaper real estate assets, as Czech citizens will prioritize lower residential costs over better residential areas.

Another possibility is that Czech citizens will prefer to remain in a leased apartment for longer than usual, for example in order to save money to meet the criteria to receive a mortgage and purchase an apartment later on. The projection, therefore, is that the cost of leases will rise.

Some see this as an opportunity for foreign investors that will be able to reach the new standard of mortgage criteria over local Czech that has lower salaries.

It is hard to predict which sites will enjoy a rise in demand, but these will most likely be small apartments in the center of the big cities such as Prague, or else small and medium apartments in common.

Will this regulation make it harder for foreign investors to receive a mortgage?

Probably not, because foreign investors must already meet strict criteria to receive a mortgage. Most investors who are not resident of the Czech Republic or Czech Citizens can not receive a mortgage of over 60% as of today, so they already meet the requirements of the new regulations.

As aforementioned, most foreign investors purchase real estate in the Czech Republic for investment purposes. They also meet the required income criteria, that is the size of the mortgage relative to their yearly net income, and the monthly mortgage payment relative to their net monthly income.

What will be the impact of all this on the mortgage market?

It is hard to say but the following scenario seems most likely: since the overall sum of the mortgages has dropped (some of the clients will not meet the conditions to receive a mortgage and others will take lower mortgages). The expectation is that a customer who receives a mortgage will be considered an important client by the banks and they will seek to keep him – accordingly the competition, via more attractive mortgage conditions, will grow fiercer.

Interests on Mortgages

Since the Czech National Bank (CNB) has proportionately increased the interest rates as well, the possibility that mortgage rates will also moderately increase in the future cannot be discounted. In fact, the Fincentrum Hypoindex (The average periodical interest for common mortgage types) has consistently grown since January 2017, even though only at a relatively low rate. Still, even after the Czech National Bank announced a hike in interest rates on June 2018, the two largest banks in the Czech Republic (Česká Spořitelna and Komerční banka) announced surprisingly that they were reducing the basic mortgage rate by 0.2% so that surprises are certainly possible in this respect as well.

Do you want to hear more about Real Estate in the Czech Republic? Set up a meeting with us.


Prague has the highest number of businesses in the world that accept virtual coins

posted 12 Aug 2018, 08:45 by Conbiz Info Center   [ updated 12 Aug 2018, 08:45 ]

Prague has the highest number of businesses in the world that accept virtual coins 

An analysis by the economic magazine Forbes based on the Coinmap data results in an unambiguous conclusion – Prague is the leading city in the world in the Bitcoin field. Prague has the highest number of businesses that accept Bitcoin payment (147 places). Prague is followed by the following 9 cities: Buenos Aires, San Francisco, Madrid, New York, Amsterdam, Bogota, Vancouver, London and Paris.

The ranking is based on the number of businesses that received Bitcoin payment and does not take into account the size of the population. In fact, Europe and North/South America dominated the Forbes list at the expense of Africa, Asia and Australia thanks to limitations on the use of this coin in a number of states such as China, the Gulf States and more. Tel Aviv on the other hand had high intensity Crypto scene.

This may sound like science fiction, but there are already people using the Bitcoin map, such as the "Crypto Nomads" – people who wander from place to place utilizing only the bitcoin. Forbes mentioned that at least one such nomad spent the entire summer of 2017 in Prague primarily due to the ease of Bitcoin use in the city.

The bitcoin is considered to be a popular coin in states in which no stable coin exists. For example, Venezuela is the site of 8% of all bitcoin transactions in the world, in spite of holding a population of only 31.57 million people – less than half a percent of the world population.

However in the Czech Republic in general, and in Prague in particular, the trend is opposite. For example, there is usually a considerable gap in the use of Bitcoin between rural and urban regions, but in the Northern Czech town of Zatec (with a population of only 20,000) there are over 50 businesses that only accept payment in Bitcoin. Another, country, by the way, that goes against this trend is the Netherlands.

Prague is also the home of bitcoin café, the only café in the world to accept payment solely in bitcoin and not via other payment methods. In the same building are also the chief officers of Paralelní Polis – a center for the promotion of alternate currency payments that organizes worldwide conferences in the topic.

The city is also the home of SatoshiLabs, a company in which both specialists and hobbyists in the field of virtual coins operate. The company has been a pioneer of several fields in Bitcoin technology and has developed various associated software. So has the General Bytes Company, which deals in the field of cryptology and is considered to be the second largest company in the world, with its headquarters in Prague.

More about business in Prague.

The Czech labor market continues to thrive, and the number of available positions is at an all-time high

posted 12 Aug 2018, 08:38 by Conbiz Info Center   [ updated 12 Aug 2018, 08:39 ]

The Czech labor market continues to thrive, and the number of available positions is at an all-time high 

While it is true that the unemployment rate in the Czech Republic has slightly risen in July due to seasonal fluctuations, the labor market is still thriving, and the number of available positions is at an historical all time high.

This rise derives from various seasonal factors that recur every year, such as low recruitment during the holiday season in early July, entry into the market of university graduates, and more. As expected, in July the unemployment rate in the Czech Republic rises (see attached figure) as it did this year. In July 2018 the unemployment rate in the Czech Republic rose from 2.9% to 3.1%. Even so, this is a very satisfactory unemployment rate. By the way, the unemployment rate in Prague itself is near zero (!).

The number of available positions in the Czech Republic has reached an all time high

In spite of the rise in the unemployment rate, the number of available positions is at an all-time high – 310,000 jobs. In comparison to the same period in the previous year, this represents an addition of around 122,000 job, in other words 71,500 fewer unemployed – a decline of 23.6%. what this means is that since April 2018, the number of available jobs in the Czech Republic has outstripped the number of job seekers.

Another happy fact is that the long term unemployment in the Czech Republic is constantly declining. For example, the number of jobseeker who are unemployed for over 5 months has declined by 32.6%, in other words 57,600 people less than in the equivalent period in the previous year.

And what does the future hold?

The number of unemployed in the Czech Republic is the lowest in Europe, for several reasons. In any event, the unemployment rate has reached such low levels that it is projected to decline more slowly than in the past.

Thinking of working in the Czech Republic? This is for you

Unemployment rates in the Czech Republic are at an all-time low

posted 30 Jul 2018, 22:04 by Conbiz Info Center   [ updated 30 Jul 2018, 22:04 ]

Unemployment rates in the Czech Republic are at an all-time low

The unemployment levels in the Czech Republic have reached an all-time low and are no more than 2.9%. What this means for those seeking employment in the state is that finding work in the Czech Republic was never easier. According to the data of the Czech Ministry of Labor and Social affairs, there are currently 10 available jobs for every individual seeking gainful employment.

The spokesperson of the Czech Ministry of Labor and Social affairs, Martin Bačkovský states that the economy is flourishing tanks to the low unemployment, so that many companies today no longer require employees. He says that there are currently 300,000 available jobs in the market, 70,000 of them in positions that require no prior experience. He therefore claims that in many cases lack of work experience in the Czech Republic is not a disadvantage.

This is a surprising figure, when one compares it to other countries in Europe. It is true that in the first quarter of 2018 many countries such as the Czech Republic enjoyed low unemployment rates (such as Germany, Hungary and Poland), but on the other hand there were countries in which high unemployment rates were observed such as Greece (20.1% in March 2018), Spain (15.8%), Italy (10.7%), France (9.2%) and Croatia (8.9%).

In fact, the unemployment level in Europe is reflective of the national differences between the states in the field of economic performance, so that one can understand why the Czech Republic is attracting so many workers from the European Union States with lower employment numbers, such as Greece, Spain and Italy.

According to the data of the Czech Central Bureau of Statistics, published in early 2018, the work immigrants who have streamed the Czech Republic have led to a massive rise in the number of foreigners in the country. In fact, the Czech Republic currently holds 500,000 foreigners, who make up 5% of the population.

Do you want to learn more about the Czech Republic and the economic condition in the country? Click here

The economy of the Czech Republic is amongst the top 30 economies in the world!

posted 30 Jul 2018, 21:59 by Conbiz Info Center   [ updated 30 Jul 2018, 21:59 ]

The economy of the Czech Republic is amongst the top 30 economies in the world!

The business friendly environment of the Czech Republic has led it to assume a position as one of the top 30 economies in the world. That is what the 4th annual edition of the Soft Power 30 Index, launched by Portland, a strategic media consultancy firm in collaboration with the Center for Public Diplomacy in the South California Univeerstity had to say.

The Czech Republic reached the 26th position in the survey and pulled ahead of larger economies such as that of China and Russia. In one of the parameters, the Czech Republic reached the 19th rank – ahead of Greece and Hungary and rapidly growing economies in the Far East such as Korea and Singapore. By the way, the first place in the survey was reached by the United Kingdom, whereas France reached the second place.

These results prove that the Czech Republic serves as one of the leading business hubs in Europe. The location of the Czech Republic, and the fact that it possesses a skilled labor force and many tax incentives for new businesses and investments all indicate the same thing – the Czech Republic is headed to enjoy an ever greater economic boom over the upcoming years.

According to the founder of the survey, professor Joseph Nye of Harvard University, the survey integrated objective values and parameters from international surveys, so that it provides a good economic image and proves how changes in policy and global international trends affect the relative economic power of states. As an example he pointed at the erosion of American economic power by the "America First" policy of U.S President Donald Trump.

The Chair of the Center for Public Diplomacy in the University of South California, Jay Wang, said the following: "Public diplomacy is more important today than ever, given the current challenges and opportunities in global matters, so that this survey enables us to reach wise economic decisions."

He adds – "That is why, optimization of the economic advantages of any given state, requires it to first maintain its global presence and economic influence". The Author of the survey, Jonathan McClory claims that this survey is primarily proof of the fact that the European States, the Czech Republic among them, continue to be leading world economies.

For the full survey

Czech Republic hotels report full occupancy in May 2018

posted 16 Jul 2018, 10:01 by Conbiz Info Center   [ updated 16 Jul 2018, 10:02 ]

Czech Republic hotels report full occupancy in May 2018 

Hotels in the Czech Republic and other hospitality locations have reported full occupancy in May 2018. The data published by the Central Bureau of Statistics in the Czech Republic reveal that tourist occupancy in this moth broke all previous records – over 1.365 tourists, most of whom (60%) are foreigners.

This represents a rise of 15.6% compared to the previous month, and a rise of 4.2% in annual terms. Furthermore, over the first five months of 2018, Czech hotels have hosted around 5,526,000 people – a rise of 6.7% compared to the equivalent period in 2017, the previous record year of Czech tourism: 14.2 million people who were hosted in hotels in the Czech Republic, and 34 million lodgings.

The greatest rise in the number of guests (5.6%) was in 4 star hotels – around 867,000 people on May 2018 alone. In addition, the number of tourist lodgings in Czech hotels rose, reaching 13.2 million days.

Experts project that growth will continue at least until the end of the year for several reasons, including the relatively inexpensive rates of flying to and residing in the Czech Republic in comparison to Western Europe.

However, the experts project that the growth of the Czech economy will even further raise the number of guests in Czech hotels in the long run.

Do you also want to possess an apartment to host tourists or guests in Prague? Contact us

A study shows that living costs in the Czech Republic are lower than the European Union Average

posted 9 Jul 2018, 13:21 by Conbiz Info Center   [ updated 9 Jul 2018, 13:22 ]

A study shows that living costs in the Czech Republic are lower than the European Union Average

According to the data of a survey performed by the Eurostat Company it turns out that the Czech Republic is a relatively affordable country to live in, at least in comparison to the European Union average. The data of the survey, which examined the prices of over 2400 consumption products and services concluded that prices in the Czech Republic in 2017 were lower by 69% than the average in the European Union states, and particularly relatively to the West European States.

The survey shows that the most expensive country in the European Union is Denmark, and the least expensive in Bulgaria. In Addition, the survey shows that the Euro Block states were relatively expensive in relation to the European Union states who had not yet adopted the currency. Although the survey included no differences in the wages or the buying of the various European Union states, its results were surprising.

For example, the survey revealed that there were vast gaps (of up to 300%) in the general level of prices of various consumption products and services between the different states of the European Union. When one focuses on specific fields, the differences are no less conspicuous. For example, in 2017 there was gap of no less than 200% in the prices of basic food and (nonalcoholic) beverages between the different states.

The Eurostat experts claim that the differences derive from differences in taxation between the different states, but the bottom line doesn’t lie- the Czech Republic is simply less expensive to live in. The surprising thing is that there was not a single field in which the Czech price range exceeded the European Union average, but there was one field in which the Czech Republic met the mean – the field of Media.

In most of the parameters, the prices in the Czech Republic were well below average. For example: food and alcoholic beverages (86% of the average), furniture, alcohol and tobacco (74%), fuel (87%), clothing (99%), electronics, electric home appliances and footwear (93%).

In certain respects the Czech Republic reached the bottom of the list as one of the most inexpensive countries, for example in the field electronics products (92% of the average), and restaurants and hotels (60%), the Czech Republic was the third lowest priced country on the list. In the field of personal transportation devices the Czech Republic reached the second lowest place (82%), whereas in the field of transportation it reached the least expensive ranked place (52% of the average).

That is, by the way, one of the primary reasons that the Czech Republic in general, and Prague in particular, have enjoyed, over the past few years, positive immigration from throughout the European Union.

Do you want to hear more about investment opportunities, particularly for Israelis, in the Czech Republic? Please contact us.

Personal taxation in the Czech Republic

posted 1 Jul 2018, 23:54 by Conbiz Info Center   [ updated 1 Jul 2018, 23:55 ]

Personal taxation in the Czech Republic

Czechs who are foreign residents are liable for taxation only on their Czech derived income. Couples with at least one child may choose a common tax calculation subject to certain conditions. Czechs who are foreign residents may utilize tax deductions, provided that they derive 90% of their income from Czech sources.

Income tax in the Czech Republic

The income liable for taxation is usually the cumulative income of all sorts from which the permitted expenses are deducted. The taxation rate on income is a fixed 15%.

Income from rent

The income from leasing a non-commercial property under the common ownership of a married couple will be taxed only as the income as one of the members of the couple. Tax liable income can be calculated in one of two ways detailed in the article in this link.

  • Capital gains tax from realization of real estate in the Czech Republic is usually included in the calculation of the total liable income and is taxed at the regular income tax rate of 15%. The capital gains are usually calculated as the price of the property at the sale minus the costs of purchase.
  • Capital gains from selling properties that are not tax-deductible businesses in the event that the property owner has held the property for at least 5 years.

Inheritance tax

Its rate is 0%. To read more press here.

Purchase tax

A purchase tax is placed in the Czech Republic on all real estate properties at purchase, with the exception of properties purchased from a contractor. The purchase tax is collected from the buyer, and its rate is 4% of the purchase price.

For more on the tax system of the Czech Republic – read here.

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