Real Estate

House Hunting in the Czech Republic: A Restored Gem in Prague’s Historic Heart

This two-bedroom apartment is on the fifth ground of a landmark constructing on Parizska Street, a historic strip of Art Nouveau design and high-end purchasing in central Prague. The 1,260-square-foot residence, constructed in 1907 and renovated in 2012, comes totally furnished with largely custom-made items.

“This home is special due its unique location,” mentioned Jan Kolar, the dealer of Czech Republic Sotheby’s International Realty, which has the itemizing, including that it “stands out thanks to its mixture of architecture of Art Nouveau and historicism, and its dominant tower in the front which no visitor of Parizska Street can miss.”

The work completed in 2012 was a whole reconstruction, Mr. Kolar mentioned, together with “everything from creating the current layout, new floors, new bathrooms, new pipes, new electric wiring, to custom-made built-in furniture, kitchen, wall paint, wallpaper, decorative ceilings,” he mentioned.

The entry corridor, with a half bathtub, is at the heart of the condo. The front room, eating room and open kitchen are at the entrance, with Macassar ebony flooring and enormous unique home windows (additionally restored in 2012) overlooking the avenue. A wood-framed sliding glass door separates the eating space from the front room, which has built-in bookshelves. The kitchen has quartz counter tops and home equipment by Miele, in addition to a door main out to a balcony.

A small hallway with a closet results in the two bedrooms, each with en suite baths. The smaller bed room has a balcony.

Several updates modernized the condo whereas preserving its historic attraction: The entry corridor has Venetian wall paint, and the crystal chandeliers are by the Czech model Preciosa.

Parizska Street runs via the coronary heart of Prague, the Czech Republic’s capital metropolis, from Old Town Square to the Vltava River. Boutique outlets and eating places line the thoroughfare, and historic websites are throughout, together with the 14th-century Charles Bridge, the Fifteenth-century Prague Astronomical Clock, and the metropolis’s Jewish quarter. Václav Havel Airport Prague is a 20- to 30-minute drive.

Prokop Svoboda, the co-founder and managing accomplice of Svoboda & Williams, the unique Christie’s affiliate for the Czech Republic and Slovakia, described Prague’s actual property market as resilient throughout the pandemic because of a mixture of things, together with low rates of interest, the repeal of a property acquisition tax, and lowered housing provide.

“The coronavirus crisis slowed down growth in many economic sectors, but the Prague real estate market proved resistant to it throughout the entire year,” he mentioned.

Prices in Prague, as in the remainder of the nation, grew steadily between 2010 and 2019, according to the Czech Statistical Office, with extra accelerated progress starting in 2016. By 2020, costs had grown 51 p.c over their 2010 ranges, far outpacing wage progress. According to a 2020 study by the financial consultancy Deloitte, Czech patrons should pay 11.4 instances the common annual wage to buy a 750-square-foot residence, the highest rate in Europe.

Peter Yusufi, the basic supervisor of Czech Republic and Slovakia Sotheby’s International Realty, mentioned patrons in Prague, as elsewhere, view actual property as “a safe bet in light of global fears of inflation” and foreign money devaluation. This, together with higher demand for second properties and traders scooping up “large portfolios of rental units,” has led to heightened demand for actual property throughout the pandemic.

The repeal of the property switch tax final year, prompted by the pandemic, additional spurred shopping for. Previously, patrons paid a 4 p.c tax on the buy worth.

Meanwhile, mortgage charges fell beneath 2 p.c, in accordance with a fourth-quarter funding report by Colliers, resulting in a file variety of accepted mortgages throughout 2020, whilst costs continued to rise. Now these charges are beginning to climb once more: “Some banks have begun to marginally increase interest rates on new mortgages in hopes of slowing down demand given the record high prices,” Mr. Yusufi mentioned.

Mr. Svoboda mentioned a chronically sluggish building-permit course of is behind the low provide. “In average, it takes almost 10 years for real estate developers to get a building permit,” he mentioned. “The effort to streamline and speed it up has been halted due to the coronavirus crisis, and developers launched the construction of only 3,246 apartments last year — a year-on-year decrease of 40 percent.”

A new regulation goals to hurry up the building course of, however “many experts agree that the new Building Act is definitely not flawless, so it remains to be seen how it will affect the construction process,” he mentioned.

Still, patrons are opting to take a position in actual property relatively than park their money in financial savings accounts.

“The demand is so high that projects are sold out even before they go public,” mentioned Pavel Parizek, a managing director of CZECH POINT 101, an actual property company that specializes in funding properties, including that his company “has a list of investors who want to buy, and we give them the properties before we advertise them.”

There are different components protecting provide low and costs excessive. For one, the pandemic left lots of Prague’s 13,000 short-term flats empty with out vacationers to fill them, mentioned Filip Sejvl, the proprietor and managing accomplice of Filip & Frank, a luxurious actual property company in Prague. Many of those models have been transformed to long-term leases, which drove rental costs down by round 15 to twenty p.c, and in some circumstances by as a lot as 50 p.c.

Even then, house owners held on to their rental properties. “They are waiting for the tourists to come back,” Mr. Sejvl mentioned.

Based on information from the Czech Statistical Office and Deloitte, Mr. Sejvl estimated the common worth of a brand new condo in Prague was 114,000 koruna a sq. meter ($505 a sq. foot) in January 2020, and 123,000 koruna a sq. meter ($545 a sq. foot) in April 2021.

The priciest space is the central district, Prague 1, a lot of which is a UNESCO World Heritage Site. Homes there common about 203,000 koruna a sq. meter ($900 a sq. foot). Just south in Prague 2, the common is 169,000 koruna a sq. meter ($750 a sq. foot), Mr. Sejvl mentioned.

Popular areas outdoors the capital, the place patrons hunt for second properties, embrace the city of Cesky Krumlov, the metropolis of Karlovy Vary, which is thought for its mineral sizzling springs, and the ski resort city of Spindleruv Mlyn, Mr. Yusufi mentioned.

Mr. Svoboda mentioned that in 2020, 78 p.c of patrons along with his company have been Czechs, with the remaining 22 p.c comprising largely Slovaks, Russians and Italians.

Mr. Sejvl mentioned patrons largely come from the bordering international locations of Slovakia, Germany and Austria, in addition to from Italy, Holland, France and Britain. Outside the European Union, they arrive from Russia, Ukraine, the United States, Israel and Vietnam. About half of his company’s patrons are foreigners.

Mr. Yusufi mentioned that, traditionally, Prague has served as a vacation spot market for patrons from Russia, China and Vietnam. “Now we are seeing the second generation of Vietnamese immigrants who have been born and educated in the Czech Republic enter the real estate market,” he mentioned. “These buyers have significant buying power and have proven to be savvy investors.”

Monika Rutland, a managing accomplice of Rutland & Partners, a Prague regulation agency, mentioned properties are bought in Czech koruna, however could also be quoted in euros for the luxurious market. (The Czech Republic joined the European Union in 2004 and is required to finally undertake the euro as its official foreign money.)

Foreigners should purchase actual property in the Czech Republic with out restrictions, however it’s tougher for nonresidents to get a mortgage. “The banks introduced stricter rules and, basically, if you do not have residency and employment income in the Czech Republic, it is almost impossible to obtain a local mortgage,” she mentioned.

Czech; Czech koruna (1 koruna = $0.48)

The annual property tax on this condo is $140, and the month-to-month rental charges are $600, Mr. Kolar mentioned.

Jan Kolar, Czech Republic Sotheby’s International Realty, 011-420-721-645-703; sothebysrealty.com

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