The impact of rising tourism on apartment prices in Prague

Post date: Mar 01, 2019 1:22:8 PM

The impact of rising tourism on apartment prices in Prague

The Czech Republic is considered to be a genuine tourism powerhouse. Breathtaking scenes and nature, historical cities and comfortable transportation are only some of the factors behind the country's great attraction to tourists. Being located smack in the center of Europe has also helped it become a first class tourist site. Only a few hours by train sperate the capital of the Czech Republic, Prague, from Vienna and Berlin. Thanks to the Schengen Agreement, travel between these states is comfortable, affordable and does not involve any passport control checkpoints.

Tourism in Prague

Most tourists who arrive in the Czech Republic spend several nights in Prague and continue onwards to the rest of the state. However, a significant portion of them come specifically for Prague and to no other site in the country. What this means is that from year to year the number of tourists visiting Prague is constantly rising. For example, in 2018 Prague registered a rise of 3.2 percent in the number of tourists in the city compared to 2017 – roughly 8 million visitors to a city with a population of only 2.5 million people. This is after 2017, which is considered a peak tourist year – with over 20 million tourists in all of the Czech Republic (a rise of over 9% in comparison to 2016).

The impact of tourism in Prague on the residential real estate prices in the city

One of the influences of tourism is on the cost of apartments, particularly for the purpose of short term tourist rentals. The data of the central office for statistics in the Czech Republic indicates that in all of the Czech Republic, the number of visitors to the various hosting sites such as Airbnb (and other such platforms) has reached 21.3 million in 2018 – 1.3 million more than in 2017, which constitutes a rise of 6.4%. the great demand for short term living accommodations leads to an often double digit return on investment for residential apartments purchased in Prague.

Another effect of tourism is on the prices of second hand apartments. A survey performed in the field by the Bezrealitky Portal has found that Prague is the most expensive city in the Czech Republic in terms of real estate. In Prague, prices have reached 80,361 Czech Korunas per square meter (According to other surveys, these prices have reached 101,091 Czech Korunas per square meter). The prices of private homes have also risen over the past year and Prague has registered a rise of 36% in their prices (Up to a level of 68,647 Czech Korunas per square meter).

What does the future hold?

The expectation is that the real estate prices in Prague will continue to rise and in some areas even more than in the previous year. For example, in the center of Prague and in sites that are a short distance away from the capital. The reasons for this, other than the rising tourism, are many, such as non availability of rental apartments in the areas of greatest demand, construction laws which place encumbrances on the beginning of construction, long processes to receive construction permits and the absence of infrastructure to expand real estate supply.

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