How Does the Czech Republic Real Estate Market Look Like?

posted 5 Apr 2018, 00:01 by Conbiz Info Center   [ updated 5 Apr 2018, 00:02 ]

How Does the Czech Republic Real Estate Market Look Like?

The real estate market in the Czech Republic enjoys a great deal of macroeconomic economic stability and is therefore of interest to many investors. Before you is a short review of the Czech Republic Real Estate market and answers to many of the questions that are of interest to potential investors, including possible obstacles for investment, financing conditions, and more.

The economic situation in the Czech Republic on the macro level is a source of pride to the citizens of the Czech Republic. Over the past few years the economy of the Czech Republic has grown each year by around 3% and the expectation is that this trend will persist for years to come. The Czech Koruna, which is the local currency, remains stable, though on April 2017, the pegging of the currency to the Euro has been canceled. In addition, from 2016 onwards, the Czech Republic has enjoyed the lowest unemployment rate in all of Europe. 

Real Estate in the Czech Republic 

The real estate market in the Czech Republic is affected by the macro economic situation in the country. The proof thereof is the extent of the real estate transactions in the first half of 2017 has broken all records and reached a total of 2.1 billion Euro. The projection is that this situation will last thanks to the low interest rates, high employment rates, and high capitalization rates in luxury real estate assets, so that investment in real estate becomes particularly worthwhile in comparison to other investment options. 

Residential Real Estate 

The primary bottleneck in the field of real estate in the Czech Republic is the low availability of residential real estate, particularly in the most desired neighborhoods of Prague. Even though the demand for residential real estate has steadily risen over the years, the number of new construction projects remains low. The primary reason for the gap between supply and demand is the long approval process required for new construction in the Czech Republic. For example, the number of new constructed projects in 2016 was lower by 15% than the number of construction permits.

Commercial Real Estate 

The Czech Real Estate Market is flourishing in the field of commercial real estate (offices and malls) as well. For example, the office catchment in Prague is over 90% (The highest rate since 2008) and the malls continue to be a highly desired real estate target of acquisition. Nonetheless, the number of new construction projects in the field of commercial real estate remains low, and the demand four outstrips the supply. 

Bank financing and mortgages in the Czech Republic 

According to the KPMGProperty Lending Barometer, Real estate financing has remained stable over the past few years. The findings of the survey are that the rate of high risk loans in the field of real estate in the Czech Republic is no higher than that of Germany and Scandinavia. 

Furthermore, the banks in the Czech Republic enable taking out loans in foreign currency, particularly in Euros . Furthermore, the survey finds that the Czech banks ask for rates of up to 70% LTV and enable a debt ratio of at least 1.2%. They also provide generous loans to remunerative real estate properties, for example 2.22-2.68 percent for offices, 2.26 – 2.6% for other commercial real estate and 2.4 – 2.73 percent for logistical real estate. 

Who Invests in Real Estate in the Czech Republic. 

Most investors in real estate in the Czech Republic are foreign investors (around 70%), with German investors retaining their high representation. A significant rise in other European, as well as American and Asian investors is also notable. Many Israeli companies are also active in the field of Real Estate in the Czech Republic (particularly in the field of constructing apartments and projects) that realize the potential of real estate assets purchased prior to the economic crisis of 2008. 

Are you thinking of purchasing a real estate asset in Prague? Contact us.

Source: KPMG


Tourism to the Czech Republic has reached a record high in 2017

posted 4 Apr 2018, 23:47 by Conbiz Info Center   [ updated 4 Apr 2018, 23:51 ]

Tourism to the Czech Republic has reached a record high in 2017

The data of the Czech Republic Central Bureau of Statistics is that 2017 was a peak season in the field of tourism to the Czech Republic. The number of guests in the hotels, hostels, guesthouses and camping sites in the Czech Republic passed the 20 million mark for the first time ever, a rise of 9.1% in comparison to 2016, in which the Czech Republic hosted 1.7 million less visitors. The rise in tourism in 2017 includes both internal and incoming tourism, including 10 million foreign tourists who represent a rise of 9.2% in comparison to the previous year. However, internal tourism in the Czech Republic has also risen, reaching 9.9 million people, a rise of 9% in comparison to 2016.

One of the most important parameters in the field of tourism is the number of nights spent at lodgings performed by tourists in the Czech Republics. In 2017, the total number of nights spent at lodgings reached 53.3. million nights, a rise of 7.3% in comparison to 2016. The number of tourists and overnight stays was high in all regions of the Czech Republic, but particularly in the Region of South Moravia, where occupancy grew by 14.6% and the number of overnight stays grew by 14.9%.

Rises of over 10% were also registered in the Plzeň , Ústí nad Labem, Moravian-Silesian and Karlovy Vary Regions. Prague was the site, in 2017, of no less than 7,652,865 tourists, of them 6.6 million foreign tourists – a rise of 7.4% in comparison to 2016.

2017 witnessed 850,000 more foreign tourists than 2016. The countries of origin of the tourists were primarily Germany (1.95 million tourists – a rise of 3.9% in comparison to 2016). Slovakia (689,490 tourists – a rise of 7.2%) and Poland (578,465 tourists – a rise of 6.9%).

The Russian Federation was the fourth largest source of tourists – 551,191 in number (A rise of 35.5% in comparison to 2016). China at 491,648 tourists (A rise of 38.2%, largely thanks to new direct flights from Prague from a variety of locations within China) was the sixth largest source of tourists, whereas South Korea (417,438 tourists -a rise of 28.2% in comparison to 2016) was the sixth.

The Fourth Quarter of 2017 Has Also Reached a Tourism Record High. 

In the final quarter of 2017, a rise of 6.1% was registered in the number of overnight stays in comparison to the fourth quarter in 2016. The number of overnight stays of foreign tourists in various lodgings rose by 7.4% whereas that of local tourists rose by 7.7%. the number of overnight stays in that period came out to 10.5 million Czech Korunas, a rise of 6.1% compared to the fourth quarter of 2016. The rise in Hotel overnight stays came out to 7.1%, whereas overnight stays in guesthouses rose by 6.2%. local tourism is responsible for a 4.2% rise in the number of overnight stays whereas foreign tourism is responsible for a rise of 7.4% of the overnight stays.

All regions in the Czech Republic have shown this rise but in Plzen the rise in overnight stays has been truly outstanding – a 21.1% percent rise in all types of overnight stays: a 22.1% rise in the number of overnight stays, a rise of 22.1% in foreign tourist overnight stays, and a rise of 20.4% in internal tourist overnight stays. South Moravia has also shown a double digit rise of 17.2%, whereas other regions of the Czech Republic have registered a lower rise of under 10%.

In the fourth quarter of 2017 7.9% more tourists have reached the Czech Republic in comparison to the fourth quarter of 2016, with a rise of 8.1% in foreign tourism and a rise of 7.7% in internal tourism being registered. During that period, 4.3 million guests were registered in collective lodgings – a rise of 7.9% in comparison to the fourth quarter of 2016. Overall, the number of foreign tourist overnight stays at collective lodgings rose by 8.1%, whereas that of local tourists rose by 7.7%.

Most tourists (1.6 million people) stayed in 4-star hotels, representing a rise of 8.3% in comparison to 2016. Around 1.3 million people stayed in 3-star hotels (a rise of 7.4% a year), and guest houses registered a rise of 7.4% in comparison to 2016.

The highest number of tourists in this quarter arrived from Germany (477,899 people - a rise of 3.5% in comparison to the fourth quarter of 2016), Slovakia (169,400 people – a rise of 9.1%), Russia (A rise of 23%), China (A rise of 25.7%) and South Korea (A rise of 20.4%).

During the fourth quarter of 2017 Prague enjoyed an inflow of 1.94 million tourists (1.63 million of them foreign tourists) representing a rise of 7.2% in tourism, both internal and foreign tourism. The number of overnight stays in tourist lodgings in Prague rose in the fourth quarter of 2017 to 4.52 million nights (of which 3.99 million overnight stays at tourist lodgings were performed by foreign tourists) -a rise of 7.5% in the total number of overnight stays and a rise of 7.6% in the overnight stays of foreign tourists.

Do you find these numbers interesting? We will be happy to help you locate an interesting, and remunerative, investment in Prague. What best works in the Old City of Prague are real estate properties and apartments that are intended for tourist lodgings through the AIRBNB booking platform.

The annual return on investment in this model is roughly 8-12% a year (Without taking into account the rise in property values).

If you are interested, then please- Contact us


The value of apartments in Prague has risen on the average by 68% in the past five years

posted 4 Apr 2018, 23:38 by Conbiz Info Center   [ updated 4 Apr 2018, 23:39 ]

The value of apartments in Prague has risen on the average by 68% in the past five years 

Purchasing an apartment for investment purposes in Prague is turning out to be a very wise investment indeed. Apartment owners in Prague have profited more than investors in the European securities or gold exchange. According to the data of the real estate company Central Group, an investment of one million Czech Korunas in an apartment in Prague has provided a return on the investment of 68% over the past five years. In fact, only real estate investment in London over these years has even approached the return of investment on apartments in Prague – a rise of 63.8% over 5 years.

The only investment to provide a higher return than investment in Prague Real Estate was the S&P 500 index (In the New York City Stock Exchange) – a return on investment of 113% over five years. The EuroStoxx50 and the Liv-Ex Fine Wine 100 have also provided a fine return on investment of 47.2% and 30.4%, but this is still significantly lower than the return on investment in Prague real estate.

Investment in cryptocurrencies has also derived a fine return since 2012, but such investments have experienced considerable fluctuations and may well fall in value as regulation of cryptocurrencies spreads. For example, on December 2012, a single bitcoin was worth 13$ whereas at the end of 2017 it was worth 17,900$. However, by the beginning of 2018, the bitcoin was valued at only 11,134$.

Unlike the bitcoin, investment in traditional currencies turned out to be non-remunerative. For example, the American Dollar rose in value over the past 5 years by 8.2%, whereas the Euro declined in value by 0.3% in comparison to the Czech Koruna. Nor did investment in oil turn out to be a good choice – investors experienced losses of 40%.

Investment in real estate in Prague did not experience any of the fluctuations associated with other types of investments such as investment in gold or stocks. It is true that investment in the PX50 index in the Prague stock exchange resulted in a return of 17% over 5 years, but it also experienced very high fluctuations. Gold also experienced high fluctuations in value, losing 12% of its value during this period. 

"It is apparent that investment in an apartment in Prague is a very stable investment in comparison to other types of investments" says Michaela Tomskova, the CEO of the Central Group, and adds: "Unlike the stock or commodity indexes, investment in Prague real estate has not experienced any fluctuations and is therefore considered a particularly safe investment."

It is true that the rate of the rise in apartment prices in Prague is expected to be moderated given the decline in the availability of apartment prices, but price rises are still projected over the next years. Investors on their parts prefer small apartments (kk+1 and kk+2) because they are more easily rented out. 

According to the data of the Central Group Company, around 20-25% of the apartments sold in Prague are for investment purposes, both to derive a steady income from apartment leasing and for future profits from rises in the apartment value. Experts estimate that inflation has pushed people to seek investments with a high return, whereas economic growth in the Czech Republic has provided people with more money to invest. 

The data of the Central Group is that there is a considerable difference between the prices of new and old apartments in Prague. This difference can reach 15%. Furthermore, since October 2016, the purchase of second hand apartments is subject to a 4% purchasing tax on the buyer. Central Group furthermore recommends that the energetic efficiency (For example, heating costs) of any asset be taken into account in the calculation of long term expenses, because new real estate properties are generally built according to greener standards. 

Are you interested in investing in the Czech Republic? Please contact us and we will be happy to assist you.


Come and discover the Bořivojova project in the Žižkov neighborhood in Prague

posted 26 Mar 2018, 23:28 by Conbiz Info Center   [ updated 26 Mar 2018, 23:31 ]

Come and discover the Bořivojova project in the Žižkov neighborhood in Prague

-Sold Out-

New! We are now marketing the In the Bořivojova project in the developing Žižkov neighborhood in Prague 3, which enables investment in apartments which are intended both for long term lease and short term lease such as Airbnb. The project includes renovation and sale of 27 furnished apartments in various sizes which sprawl over 7 floors, such as studio apartments with a garden and a terrace and additional apartments which have been renovated with the best possible materials. For example: some of the apartments have floor heating and some have acoustic windows.

A building which is both an experience and a good investment

The renovated building was originally built in the mid-19th century, and is an artistic delight in and of itself. The building blends in various architectural styles including baroque, renaissance and more, but that is not all – the incredible view of the historic center of Prague spreads out from the vantage points in the upper stories of the building, so this is not merely a wise investment, but a particularly beautiful one as well.

An ideal location

The building is ideal for those investing in short term tourist leases such as Airbnb for several reasons – it is only a few electric tram stations away from the Václav Havel square in the heart of the City of Prague it contains a clear separation between private and public spaces and in short – it enjoys a perfect location for short term tourist leases. Nonetheless, the building is also appropriate for long term leases, for example for students and lecturers in the nearby University of Economics, a university with a world class reputation in its field.

The Golem returns to life

In addition, the building is adjacent to the PARUKÁŘKA Park, the park in which, as legend has it, the famous golem is buried. The park also contains bicycle paths, playgrounds and walking paths, and offers a splendid view. Moreover, the building itself has two commercial floors and there are also nearby shopping centers, schools and kindergartens, all of which definite attractors for young families seeking an apartment to lease for the long haul.

A neighborhood for the young generation

In fact, purchasing an apartment for investment in this project is much like listening to the beating heart of the city. The project is in the heart of the Žižkov neighborhood which is characterized by coffee houses pubs and many bars, and a particularly youthful atmosphere. The neighborhood holds the Jára Cimrman Theatre, the Palác Akropolis night club, the concert and exhibition hall “Atrium” and many other cultural sites. Not only will you enjoy a very remunerative investment, your tenants will also enjoy a year round cultural experience.

For more about the project, photos and movie clips – click here

For additional information – contact us

-Sold Out-


The Czech Koruna is the most rapidly appreciating currency in 2017

posted 26 Mar 2018, 23:15 by Conbiz Info Center   [ updated 26 Mar 2018, 23:16 ]

The Czech Koruna is the most rapidly appreciating currency in 2017


The Czech Koruna, together with the Polish Zloty, are the most rapidly appreciating currencies in the world for the year 2017. The Dollar exchange rate, on the other hand, has dropped against the six leading international currencies by around 9% in 2017.

The intervention of the central Czech Bank, in other words, artificially keeping the exchange rate at 27 Czech Korunas per Euro, ended in April 2017, which led to the appreciation of the currency value by 5% versus the Euro and by 17.5% versus the dollar – according to the data of Hospodářské noviny as of 2017. The Chief Economist at the ING Bank claims that the Czech Koruna will continue to strengthen, but at a rate slower than its appreciation rate in 2017.

The appreciation of the Czech currency has led to a growth in the GDP, a growth in worker wages, and also to a rise in an inflation. The Czech Central Bank has responded to this by raising the interest rates. Most analysts project an additional growth of the GDP, and a tightening of the Czech Republic economic policy in 2018. The projected exchange rate in 2018 will be around 25 Czech Korunas per Euro and will probably favor the Czech Koruna even more by the end of 2018.

The second success story of this year was the Polish Zloty which has appreciated by 16.6% versus the dollar and by 4.6% versus the Euro. In other words, it is currently ranked second after the Czech Koruna in terms of value appreciation. Currently, the Zloty – Euro exchange rate is 4.21 Zloty to Euro, representing a 1.5% appreciation per annum (according to the Reuters news agency).

To read more articles on businesses and entrepreneurship in the Czech Republic – click here


Demand for workers in the Czech Republic is at a record high

posted 26 Mar 2018, 23:06 by Conbiz Info Center   [ updated 26 Mar 2018, 23:09 ]

Demand for workers in the Czech Republic is at a record high

The Czech Republic continues to enjoy the lowest unemployment rate in the European Union. According to the data of the Central Bureau of Statistics in the Czech Republic, in November 2017, the unemployment level in the country was around 2.5%. The unemployment rate of men during that month was only 2%, whereas that of the women was 3%.

The total demand for workers has risen to a record high of 216,000 at the end of 2017. In fact, many companies are have difficulties in recruiting high quality employees and the significance is felt in every state. In Prague, for example, there is a shortage of electric tram and bus drivers, a shortage which is creating long lines and waiting periods in the public transportation stops. 

Higher wages in other states in the European Union has led many to seek chances at employment outside of the Czech Republic. In addition, the Czech Republic has a very strict policy in the field of work licenses for foreigners, so that a shortage of both high skill and high wage jobs and a low skill, low wage workers is formed. 

Experts in the field of labor criticize the education system in the Czech Republic on two accounts: according to them, it stresses theoretical aspects at the expense of practical knowledge or on the job training. These experts also claim that there will be no choice eventually but to raise the wages in order to fill vacant job openings. They further warn that a high demand for workers harms economic growth and slows the rate of production. 

On the other hand, the absence of workers impacts those manufacturers who are having a hard time maintaining and operating assembly lines based on small scale labor. According to Czech Republic Labor Ministry, at the end of 2017 the highest demand was for assembly line workers, drivers, blacksmiths, cleaners, welders and chefs. Before you is the full list of the requirements for workers in the Czech Republic as of the end of 2017 by category and number:

  • Product and equipment installation workers – 23,897
  • Support workers in manufacturing – 15.105
  • Miners and builders – 14,929
  • Truck, bus and electric tram drivers – 10,624
  • Blacksmiths – 10,040
  • Cleaners – 8013
  • Skilled construction workers – 7181
  • Welders – 7014
  • Chefs – 5903
  • Security guards and personnel – 5587
  • Support workers in agriculture and forestry – 4012
  • Analysts and software developers – 3557
  • Stationary machine operators – 3001
  • Waiters and bartenders – 2982

Are you looking for employment in the Czech Republic? 


The Czech Republic is the greatest toy exporter in Europe

posted 25 Mar 2018, 23:30 by Conbiz Info Center   [ updated 25 Mar 2018, 23:30 ]

The Czech Republic is the greatest toy exporter in Europe 

The Czech expression "Kdo si hraje nezlob" can be roughly translated as “A child at play has no time to be naughty”. Should this indeed be true, then many parents all over the world, including the United States, Russia, Japan and Israel can and should offer thanks to the toy export from the Czech Republic and it’s 270 toy and game manufacturers.

According to the statistical data of the Eurostat research institute, the Czech Republic is the greatest toy and game exporter in Europe to countries outside the European Union. According the research institute report, the Czech production was responsible for 32% of the total export of toys in Europe and totaled some 1.5 billion Euro. The primary destinations of toys exported from the European Union were Russian and Switzerland (15% each) and the United States (13%). 

These figures are backed by the figures of the Czech Association for Games and Toys. The figures of the association show a steady rise of 5% per annum every year for the past decade in the export of Czech produced toys. This rise is derived from two primary factors: the fact that the Czech economy is advanced and strong, and the fact that the Czech Republic is a technologically advanced country relative to its eastern neighbors. 

One of the Czech Companies is Efko, which manufactures toys in two factories located in the Czech Republic ever since 1993. The company specializes in wooden games, thinking games and board games and is considered to be the Czech response to Playmobil thanks to the Igráček game. 

Another renowned Czech Republic company is Deota, which manufactures wooden toys in its factory in the Jizera Mountains. The output of the company has risen by 8% per annum over the past three years and most of its products have been exported (around 65%), primarily to Germany and Switzerland, but also to the U.S.A, Scandinavia and Japan.

For more articles on businesses and entrepreneurship in the Czech Republic – click here



Czech residential real estate market study 2018: trends and predictions

posted 14 Mar 2018, 22:43 by Conbiz Info Center   [ updated 26 Mar 2018, 11:12 ]

Czech residential real estate market study 2018: trends and predictions

This comprehensive market survey was prepared for those foreign investors who are considering investing their capital in one of the most attractive European real estate markets – the Czech Republic. This study is based on a number of highly credible and publicly accessible market surveys and analyses, as well as on our professional experience. It aims to identify driving trends in the Czech residential real estate market in 2018 and in the upcoming years. This study primarily deals with the Prague real estate market in which 65 % of all apartment transactions in the Czech Republic occur. Accordingly, this is the predominant market of the Czech Republic, followed by Brno (centre of the Moravia region) with a 10% share in apartment transactions. Note: the information that follows refers to the Prague real estate market, unless explicitly stated otherwise.


Short look back at 2017 residential real estate market

The rapid rise in apartment prices over the previous 2 years was driven by many unique factors coming together at the same time. To name the most important: release of postponed demand from the global financial crisis years, very cheap mortgages, transfer of the obligation to pay the real estate acquisition tax to the buyer, a new Czech law on Consumer Loans and stricter regulation of mortgages by Czech National Bank (CNB). Many people wanted to finalize their real estate transactions before all of these changes began to apply.

Overview of 2018: small cool down after 2 hot years 

The majority of real estate market analysts and realtors expect a cool down of the real estate market in 2018 after previous two hot years. Prices of residential apartments in Prague VIP locations should either grow slowly (predictions oscillate between 5-10% year-to year increase) or remain stagnant, depending primarily on real estate location. Some realtors even expect a small decline of prices in the category of second hand apartments located outside of top Prague locations, which are primarily in demand by the Czech middle and lower class. 

The mortgage market this year is shaped by more expensive mortgages and dropping demand for them. Mortgages are becoming more expensive and less affordable for the Czech middle class that can have considerable impact on the real estate market in following years. However, right now the Czech economy is in outstanding condition and is expected to continue growing steadily. Unemployment is very low and salaries are rising. Due to the favourable economic conditions, people are still strongly motivated to purchase real estate even though mortgage regulations are tightening (read further). 

These, and other trends described below, should keep the real estate market in 2018 very similar to last year market. It is expected that there will be continuous high demand for real estate in Prague and other Czech towns from investors.

Detailed overview of trends in Czech residential real estate market in 2018 from investor`s point of view

Demographics: growth of domestic population and immigration

The population of the Czech Republic continues to rise. Year 2016 was even considered to be a baby boom year. In any event, regardless of growth driven by domestic birth rates, the population is steadily growing because of immigration. According to much cited statistics of Prague municipality, Prague expects until 2030 an additional 150 thousand new inhabitants. This number is based on official statistics. Unofficial estimations of immigration are higher. Needless to say, somebody has to satisfy this rapidly growing need for housing, either by building new apartments or offering rental properties. Construction of new apartments is proceeding very slowly in Prague and Brno as we reported in previous market forecasts. Those in the know regarding real estate trends speak of ongoing tension between developers and local and central governments regarding the constant delays in easing onerous regulations and administrative obstacles that delay the approval procedures of new projects. Apart from long administrative procedures, the municipalities of two biggest Czech real estate markets, Prague and Brno, are also continue struggling with drafting their future urban development plans. As relevant building legislation changes very slowly (read further) the supply of new apartments in Prague and Brno will continue to decline, as it cannot keep pace with growing demand. This will tend to push the prices of apartments` further up. 

Mortgages: interest rates will slowly increase

Mortgages are becoming more expensive and less affordable to the Czech middle class. Why? First, because the period of historically low interest rates is certainly over. From 1.77% in December 2016, interest continued to rise in 2017 and exceeded 2%. Interest rates have continued to rise in 2018 and are expected to exceed 2.5 % in this year. According to mortgage brokers, interest rates might even reach 3% this year, in line with the Czech national Bank (CNB) intentions. This will influence the affordability of higher mortgages, especially for the Czech middle class people.

Calculation of mortgages future development (in Czech crowns)

Mortgage amount

1 million CZK

2 million CZK

3 million CZK

Monthly payment 2017 (rate 2,1 %)

5160

10 213

15 319

Monthly payment 2018 (rate 2,5 %)

5299

10 598

15 897

Monthly payment 2018 (rate 3,0 %)

5546

11 092

16 638

Source: www.central-group.cz

A restrictive mortgage policy of the Czech National Bank (read more about CNB`s restrictive rules on commercial banks regarding offering higher than 80% LTV mortgages) continues. Furthermore, since January 2018 commercial banks have begun to obey CNB`s maximum 80% LTV rule very carefully. Generally, they try to restrict mortgage applicants who try to arrange parallel loan financing to their mortgages in order to secure financing for more than 80 % of property value.

This development certainly does not harm either domestic or foreign investors. Interests on Czech bank accounts are still close to zero. This will motivate domestic investors to search for stable alternative to saving accounts to deposit their savings in. Moreover, although interest rates are growing, even a 3 % rate is still cheap, affordable and attractive for foreign investors, if we take into account returns of investment achievable with taking mortgages with such an interest rate.

Apartment affordability: growth of apartments` prices and rent prices growth

The number of middle class people who can afford to buy a new apartment in Prague will continue to decrease. The main reason for that is dramatic growth of new apartments` prices compared to 2 years ago, together with lower mortgage affordability. According to statistics, the affordability of apartments measured by the purchasing power of Czech people is the worst in country`s history. It takes 11 years for the average Czech person to save enough money to purchase a typical70 square meters flat. This statistics of one of leading public real estate portals realitymix.cz displays the rising price of a 60 meter flat in Prague over time. 


Source: realitymix.centrum.cz

Decrease of apartment affordability among the middle class pushes rental prices up. Last year they grew even faster than the purchase prices of new apartments – in many locations by an average 25% annual increase. That development was again positive for investors because it moderated the risk of their investments. Statistics from different developers differ, but we can assume that over one third of all residential apartments in Prague are being purchased for investment purpose. 

Development of salaries and the Czech economy

Czech economics is in outstanding condition. It has been growing continually for 5 years now. Salaries are growing in all sectors and unemployment is low (and practically non-existent in Prague).  According to many economic analysts, the Czech economy is set to continue growing at its current rate for the foreseeable future. Its future condition remains, of course, highly dependent on global markets, but so far everybody is optimistic. Currently, the main problem businesses face is not a lack of work, but lack of a work force. This applies to both blue and white colour work.

Very optimistic forecasts about the future development of the Czech economy and greater demand for new labour force led to significant growth of salaries in 2017. This trend continues in 2018. Inflation is expected to reach 2.5% this year. If we take into account inflation, real salaries should grow by 4% to 5% this year. The unemployment rate dropped in 2017 under 3% and, according to the prognosis of the CNBm should fall beneath 2.6% this year. This creates a unique opportunity for all employees to ask for raises and employers must be responsive if they wish to retain their work force. A combination of rising salaries, inflation and poor appreciation of savings on bank accounts, as aforementioned will lead to rising investment in real estate.

New regulation: Airbnb, Building Act and real estate services

The Airbnb phenomenon radically disrupted the real estate market in Prague, especially in the Prague 1 neighbourhood. Around 11 thousands Prague flats are now registered on the Airbnb website. So far, Czech legislation bodies have not put much efforts to regulate shared economy services. Currently these services operate in a sort of “grey” zone. This means that they are not illegal, but there are many controversies in interpretation of the law, and even disagreements by different authorities on how the existing legislation should be interpreted.  This is expected to change - and soon. Czech governmental bodies in cooperation with the Prague municipality are now preparing new legislation that should define new rules for modern shared economy services as Airbnb or transportation platforms as Uber.

In January, the much anticipated new amendment of the Building Act entered into force. The Ministry of Regional Development, initiated new legislation that promised to solve, through this amendment, the most crucial legislative problems which delayed new residential development in Prague and Brno. New amendment merges merged what have until now been separate administrative procedures (environmental impact, urban planning, and building permit procedure) into a single procedure to shorten the length of the integrated approval process. Although developers welcome this new law and see it as a step in the right direction, at the same time they don`t consider it to be a long-term solution. The majority of developers are sceptical about its practical impact. The new law has not shortened the decision-making periods of public bodies. In addition, there are still approximately 40 other minor laws that regulate particular parts of the building permit process (fire safety, public health, water management etc.). Developers assume that unless a completely unified new Building Act is adopted, and all approval competencies merged under a single ministry, nothing will really change. They also assume that the new law will not increase the availability or rate of construction of new apartments. Therefore, the supply of new apartments in Prague and Brno in the upcoming years will not meet the demands of the growing population. This will keep prices of all apartments high.

As we wrote in the past, the Czech Republic has been waiting for new regulations of real estate services for far too long. Due to elections and changes in the central government, the new law will most probably not leave the table of Ministry of Regional Development. How much longer will it take?

Major trends on new apartments market in Pragu

The distribution of new apartments` prices has changed significantly over the previous years. Apartments priced at under 45 thousands CZK per square meter have basically disappeared from the market. Price per square meter of new apartment in Prague have risen, on the average from 60 to 90 thousands CZK in the past 3 years. Furthermore, it is common for apartments to be purchased for these prices by investors during very first phase of new developer projects – pre sale – when they exist ‘only on paper’. Investors will later resell those flats with profit margins that will influence the statistics of new apartment prices for both the purchase year and the following year.

The graph below represents evolution the average prices of new apartment in the period of 2013 – 2017. This calculation does not include extreme cases, that is the 5% most expensive apartments and the 5% least expensive apartments. The Graph indicates that the average price of new apartment has been growing rapidly since the second half of 2015. Since then it has grown by 50%.  In the end of 2017 it reached 81 526 CZK incl. VAT, equivalent to an annual10% rise in prices since 2013. The most dramatic growth was in the highly popular neighbourhoods of Prague 1,2 and 6.


Source: www.trigema.cz

According to two Studies of developer companies published by consulting companies KPMG and CEEC Research (2017), the demand for residential real estate will once again exceed the supply in whole Czech Republic in 2018. The Prague market of new residential apartments is currently mostly driven by the absence of new building permits and quality lands for construction. The most attractive locations suitable for new residential development from a developers` perspective are Prague 5, 9 and 10. Developers will continue to focus on smaller apartments with 2+kk layout with very good amenities in surrounding of apartment building. More than three quarters of asked developers are planning to increase prices of new apartments in Prague by 4% in 2018. However, the number of new apartments released in the Prague market should only increase very mildly (0.6% year-to year increase).

The majority of real estate developers estimate that the prices of new apartments will continue growing over the next 2 years, however growth will not be as dramatic as it has been over the previous 2 years. There are couple of reasons for this. Firstly, housing affordability strongly depends on salaries and their growth – although stable – currently does not reflect price growth in new apartments market. Indeed, there few Czech middle class people who can effort to buy a new apartment at 90.000 CZK per square meter, which was the common price of new apartment in 2017. One example above all: one of the major Czech real estate developers – company Central Group – in its press release displayed a calculation according to which potential buyers can purchase in 2018 in Prague a small studio for the same price for which they could have purchased a 2+kk apartment two years ago.

Regional trends

According to the portal cenovamapa.org which provides the macro data of the Czech real estate, real transaction prices per square meter in 2017 for all flats – old and new – were 65.000 CZK in Prague (to complete a picture, average offer price of apartment in Prague on real estate portals was 73 526 Kč which is approximately 10% annual increase), 50.000 CZK in Brno region, 35.000 CZK in Pilsen region and 29.000 CZK in Liberec region.

Pilsen has become third strongest Czech region in number of new apartments offered for sale. The average price offered for new apartments in Pilsen is currently 49.000 CZK which is 1000 CZK above the national average. The average sale price of a flat in Pilsen is 2.5 million CZK. Considering the dramatic rise of apartment prices in Prague, the return on investments for apartment rental properties in Pilsen are in many cases more favourable. Therefore, many experienced realtors prefer real estate investments in Pilsen over Prague.

New apartment prices have also been rising in other county towns in the Czech Republic,  especially in Brno and Olomouc. In Brno, the situation in regards to poor approval procedures of new residential development is very similar to Prague. Realtors expect 7% price growth of new apartment prices in 2018 there. Continuous dropping of new apartments supply in Prague and Brno also influences the prices of second hand apartments.

Executive summary for foreign investors

The Majority of experts involved in real estate, and realtors do not perceive rapid growth of apartment prices in Czech Republic as a bubble. Quite the reverse, they claim that growth is based on very real factors – more people are coming to live and work in Prague or Brno (and other towns) as new construction stagnates, preventing supply from keeping up with demand. Lower apartment affordability will force more and more locals to either postpone their real estate purchases or choose to purchase residential apartments outside of Prague (which is already a big trend and many developers are building and purchasing lands in Prague` s surroundings for new residential projects).

Changes in the mortgage market still do not have much effect on foreign investors. They are not seeking a 100% LTV in any event. Moreover, although interest rates grow, they are still relatively low. In other words, mortgages are still cheap and attractive for foreign investors. According to the Studies of developer companies published by consulting companies KPMG and CEEC Research (2017) every fifth apartment (23%) in Prague is currently being purchased by foreigner. With respect to demographics and affordable mortgages on one side versus rise of rental prices in 2017, investment purchases of real estate in Prague and other Czech towns (Brno, Olomouc, Pilsen) will bring every satisfactory returns of investment.

Are you considering real estate investment in Czech Republic? Join our many satisfied clients and invest in rental properties with our help. Contact our consultants for more information.


Lease rates of office space in the Czech Republic are amongst the lowest in the world.

posted 18 Dec 2017, 00:53 by Conbiz Info Center   [ updated 6 Feb 2018, 01:52 ]

Lease rates of office space in the Czech Republic are amongst the lowest in the world. 

Analysis of the results of the annual poll of the Cushman & Wakefield’s Company, which inspected 215 cities in 58 states results in the conclusion that Prague offers a relatively inexpensive work environment for businesses. Office space in Prague is roughly 90% cheaper than that of Hong Kong, considered to be the most expensive city in the world – a yearly cost of 3200$ in Prague, compared to 27,432$ in Hong Kong for every workstation. The annual poll of the company made use of a new system this year and so the results cannot be compared to earlier years. The new system calculates the lease rates, the service fees, and the number of square meters of office space allocated to every employee.

Prague was ranked the second most inexpensive city for business in Europe after Bratislava (the capital of neighboring Slovakia) due to the following fact – the monthly rent in the highest quality offices in Prague is no higher than 21 Euro per square meter. The expectation is that no more than 400,000 square meters of new office space will be added in the next two years so that no significant price rises are expected. Nonetheless, Prague has only reached second place due to another fact- employees in Prague enjoy less average work space than in other cities (10 square meters in Prague compared to a worldwide average of 11.8 square meters). 

New office space areas in Prague. 

At the moment, many new projects in Prague are being constructed that will include offices. These include Smichov City in Prague 5, the Flower House in Vaclav Square, the Rosetta Palace on Jungmannova street, the Drn project at the corner of Národní třída and Mikulandsk – a number of projects near the metro stations Pankrác and Pražského, and also spaces in historical buildings in Prague 1 that will be refurbished and become offices. The area around Masarykovo nádraží is also expected to develop and include a shopping center and offices. 

Below is a list of the cities where it is most expensive to rent out office space. The stated price is the rounded rental fee per year for every work station. 

  1. Hong Kong – 27,400$ 
  2. London – 22,600$ 
  3. Tokyo – 18,000$ 
  4. Fairfield county Conneticut, United States – 17,400$ 
  5. San Francisco – 16,000$ 
  6. New York – 15,900$ 
  7. Silicon Valley – 15,000$ 
  8. Geneva – 13,400$ 
  9. Sidney – 12,000$ 
  10. Paris – 11,700$ 

For additional information regarding the Czech Republic, real estate and investments – click here



The highest lease rates in the Czech Republic are in Prague and Pilsen

posted 12 Nov 2017, 11:07 by Conbiz Info Center   [ updated 12 Nov 2017, 11:08 ]

The highest lease rates in the Czech Republic are in Prague and Pilsen 

According to the poll of the Trigema company, the areas with the highest rents in the Czech Republic are in Prague. The lower rental fees are in the Usti and Labem region and the districts of Moravia and Silesia. In the second quarter of 2017, the rental rates in Prague were double that of the rental fees in other locations in the Czech Republic. For example: a 2+kk apartment in Prague was being rented, on the average, at 14,000 Czech Korunas per month. In contrast, apartments in the Moravia and Silesia regions were being rented out for only 7000 Czech Korunas. Below are the findings of the poll, by Czech province:

  • South Moravia – an average lease for an apartment of 11,916 Czech Korunas. 
  • Central Bohemia – an average lease for an apartment of 9,875 Czech Korunas. 
  • Pilsen – an average lease for an apartment of 9,762 Czech Korunas. 
  • Liberec – an average lease for an apartment of 7,805 Czech Korunas. 
  • Moravia and Silesia – an average lease for an apartment of 7,355 Czech Korunas. 
  • Ústí and Labem – an average lease for an apartment of 7,037 Czech Korunas. 

“The residential market and the rent are closely bound,” says Mark Soral, the CEO of the Trigema company, and adds: “In places that are considered attractive residential areas, the prices of new and old apartments are higher and the apartment rental fee accordingly rises”. The data of the Trigerma company proves this. In the first quarter of 2017 the average rent of apartments in Prague was: 

  • For a 1 kk+ size apartment the rent was around 11,294 Czech Korunas. 
  • For a 2 kk+ size apartment the rent was around 14,223 Czech Korunas. 
  • For a 3 kk+ size apartment the rent was around 18,134 Czech Korunas. 

The most expensive areas to rent were in the center of the city, for example in Prague 1 the average rent was 41,611 Czech Korunas whereas in Prague 2 they were around 29,579. It must, of course, be recalled that these are average prices. On one extreme, an apartment in Prague 9 had been leased out for 4200 Czech Korunas, whereas on the other extreme another apartment in Prague 2 had been leased out for 130,000 Czech Korunas. 

If you too are considering investing in Prague, talk to us. We have specialized in the city and we have hundreds of satisfied customers.


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