“It depends on the locality and its desirability. The level of rent often makes it impossible to achieve any solid return on the investment,” said Tomáš Kulman, business development manager of the consultancy division of KMPG Česká republika. “And as to secondary housing, which could be included in the residential sector to a point, the practice we have known from abroad, where free apartments are being rented to subjects looking for a place in a selected locality, has not developed yet in Czech Republic,” he added.

Data collected by the Czech Statistical Office (ČSÚ) show that the unusual boom in housing construction, including residential projects, has been influenced by several factors. First, the positive situation on the Czech mortgage market—there were 59,550 mortgage contracts signed in the first nine months of 2007, with the value of provided mortgages totaling Kč 113 million (€ 4.2 million). In the whole of 2006 there were 62,953 contracts signed with a value of Kč 115 million.

The second influential factor is the fact that the market of savings programs for housing construction has developed well in the Czech Republic, especially as the number and volume of credit contracts designed for housing are concerned. The third relevant factor is the positive development of value-added tax (VAT) applied to housing construction works.

But the ČSÚ does not monitor how large a part of all housing projects belongs to the residential sector. “We keep a record of all apartments built for inhabitancy, their technical quality, the amount of living space, but we do not follow how big the share of residential projects in the overall housing construction is,” said Danuše Kařízková from ČSÚ’s housing statistics department.

Of course a legitimate question arises on whether the luxury housing projects have reached their limit. “Again it depends largely upon the region and the location in question. Generally speaking, a high quality project in an attractive location offered at an acceptable price always finds a buyer,” KPMG’s Kulman said. He is more skeptical though when it comes to market openings outside Prague. “[Outside the capital] projects of this type are getting started, but the demand there is by no means at the level that we can see in Prague. Besides, many apartments there have various drawbacks either in the projects themselves or in the choice of location. Their marketability can thus be hindered, with transactions taking too long and achieving lower prices than expected.

Residential housing is not for everyone

“Living in residential projects is sought mostly by well-off families or by successful single businesspeople. These clients are looking for apartments displaying architectural originality, with a terrace, balcony or a small yard attached to each place. There is an ever growing interest in housing projects of this type, especially those situated in green areas within the city,” said Lenka Medková, deputy business manager at property developer Finep. “We have been observing a new trend lately, a return to city living, because the everyday commuting from satellite towns to Prague and back consumes ever more time,” Medková said.

Developers come with new ideas and architects give them life. “We like to promote residential living,” said architect Petr Malinský, adding that there is a big future for this type of housing.

Standard is not everything

It is not only the standard of the apartment in question that defines its desirability for a potential buyer. Location is of utmost importance too; the more attractive and sought after—the better. That is why developers fight mercilessly with each other for lots in the most lucrative areas in Prague 1 such as Old Town, Malá strana and Hradčany or parts of Prague 2 and Prague 6.

There should always be a park, or even better a woods, in the vicinity of the project, underground parking of course, and a small yard or a large terrace/balcony allowing residents space to sit and relax outside. Good accessibility from downtown and easily accessible shopping opportunities in the neighborhood are also indispensable.

Developers are very fussy when it comes to standard equipment of apartments in their residential projects. Residential developer Central Group is offering luxury apartments in Prague 10–Zahradní Město, Prague 15–Hostivař, Prague 5–Radlice and other locations. “New luxury apartments of ‘rezidence’ class are equipped with high quality wooden window frames, wooden floors in all rooms, underfloor heating and many other luxury items,” said Gabriela Nižnanská of the marketing department of Central Group. Besides, high security entrances, security systems with movement detectors and connection to a centralized guard service are included in the price of all these apartments.

“I would not say downtown localities are the most sought after,” Nižnanská said. “There is ever growing demand for apartments situated in neighborhoods with good accessibility to services and well-served by transportation links, for example Prague 5,” Nižnanská added.

A rarity in the heart of the city

An interesting new project in Prague can be found at the locality of Korunní dvůr in Prague 2–Vinohrady, partially situated in and around the buildings of an old malt-house and brewery. The execution of the project is shared among developers Africa Israel Investment and Quinlan Private. “We observe a significantly higher demand for larger apartments of better quality. The most sought after are units 3+kk (3 rooms with a “cooking corner”) or 3+1 (3 rooms and a kitchen). “We are glad to see it is mainly Prague residents showing interest in these apartments,” said Jan Rosák, president of the board of directors of Bonus Group, a seller of the project. Prices of the apartments at Korunní dvůr vary from Kč 50,000 (€ 1,860) to Kč 110, 000 per square meter, or from Kč 1.8 million to Kč 18 million per unit.

Císařka: residential housing with a view

The first stage of the residential housing project at Císařka in Prague 5–Motol, representing 207 apartments and four family villas, has already passed the final inspection; 75 percent of the apartments have been sold and half of the rest have been reserved. “Rezidence Císařka is the second most luxurious project of our company,” said Pavla Temrová, spokeswoman for Finep. “Good sales results confirm that the demand for comfortable, more expensive housing in the capital is growing,” she said. The project near an old winery is divided into two stages. The first, in the western section of the lot includes 207 apartments varying from 1+kk to 5+kk set in a peaceful, secluded area. In the second stage there will be 81 further apartments and 10 family houses selling at between Kč 35,000–60,000 per sqm.

A fancy locality at Rohanský island

River Diamond project on the banks of the Vltava river in Karlín provides a unique opportunity to create a modern residential “embankment block” in Prague, architect Jaro Šafer said in 2005 to daily Hospodářské noviny. His company Šafer Hájek Architekti is responsible for the project, carried out at Rohanský island in Prague 8. “Since the years of the First Republic, River Diamond is the first luxury housing project on the Vltava banks [in Prague],” said Hana Samuelová from the marketing department of Real Estate Karlín Group. Prices of apartments vary between Kč 52,000–95,000 per square meter.

Awarded creation in Tichá Šárka

Housing project Na Krutci in Prague 6–Vokovice was drawn up by well-known architectural firm Kuba & Pilař architekti. The first stage of the project brought them the prestigious Best of Realty award in 2007. Their project has been brought to life by investor Metrostav Krutec, a subsidiary of Metrostav. The modern housing complex Na Krutci consists of 13 villas, 16 terraced houses and six apartment houses. The area is well secluded from city traffic, although it is only five minutes by car from Vítězné náměstí and therefore easily accessible from downtown.

Savoy Apartments in Špindlerův Mlýn

This project by architectural firm Morix for Sekyra Group in the Krkonoše mountains of North Bohemia consists of renovation the original hotel Savoy and construction of a new building nearby. All the buildings will be redesigned as exclusive residential housing with first class hotel services. Work began last year, with completion expected in 2008. “The building should display features of architecture typical for this mountain region,” said Radek Polák, spokesman for Sekyra Group. The project will offer altogether 5,000 sqm of space. There will be 48 high standard apartments, most of them with a balcony. The project costs are calculated at Kč 350 million.

Source: Czech Business Weekly