“The demand among Czech private investors for this type of housing has been trending on a steady increase, while the selection of available properties remains limited,” said Jan Hospodář, a partner at 108 Investment Advisory.
When the Czech Republic made its shift to a market economy a quarter of a century ago, Prague’s residential buildings were quickly snapped up by foreign buyers. And it is mainly foreigners who are now feeding the current supply. “Property owners whose
ownerships were restituted following the fall of the totalitarian regime went on, in the vast majority of cases, to sell their properties. My experience shows that it is mostly foreigners, especially Italians, who are selling up now,” said Jiří Vesecký, a manager at real estate agents Re/Max Commercial.
Hospodář of 108 Investment Advisory says said that apartment buildings in downtown Prague sell with returns as low as four percent, generally speaking a rather meagre figure for the real estate market. Yields tend to rise to about seven percent or even
higher for properties in the wider city centre, according to some authorities on the real estate market.
“The prices of houses in the city centre have increased by as much as 300 percent since the 1990s, but outside the centre of Prague the increase has been by as much as tenfold. The key factor, of course, is that prices in the city centre were set rather high from the word go,” explained Jiří Pácal, whose company Central Europe Holding has been investing in apartment houses for 25 years.
Another traditionally strong investor in this type of property is Pražská správa nemovitostí, owned by real estate tycoon Václav Skala.