czech property news september

A taster of some Czech property news in September:

Erste: Czech Republic is safe real estate harbour

The bank group Erste in its survey of Central European real estate companies stated the Czech Republic along with other Central and Eastern European countries is still a safe place for property investments. In contradiction to countries of a former Soviet Union and Western European countries, the commercial property market in the region will slow down but not stop.

Interest in luxury apartments still growing

According to the Czech News Agency, interest in the luxurious apartment segment is still strong and growing. The real estate company Engel & Volkers announced a 21% increase of interest in the expensive flats segment. Also, the development company Satpo Development revealed that for the first eight months of this year they have recorded an increase of residential units sold in range of several tens of percents.

Crisis pushes down demand of new flats

The real estate crisis which has already reduced demand for overpriced prefab flats, is now affecting the market for some new flats. In order to boost stagnant sales, developers with inferior projects have started to offer discounts or financial bonuses to buy equipment. The companies offer discounts ranging from CZK 50,000 to CZK 150,000 on kitchen equipment, or a free parking space in a garage, worth up to CZK 300,000. Customers are more demanding and selective in what they will accept. They consider the price, quality, location, architectural concept and other such factors. Overpriced, low-quality projects of poor architecture design can be found in some less desirable locations, and the times when customers would buy almost anything are gone.

Mortgage market update

The first half of the year showed a 20% y-o-y decrease in total amount of total mortgage loans in the Czech Republic. After the record years 2006 and 2007 when people borrowed 100 billion CZK and then 140 billion CZK, a the expected decrease in mortgage volumes has taken hold. However this year’s 60 billion CZK loans show the actual demand for an own flat is still strong. Moreover thanks to the recent cut in interest rates the volume of mortgages is slowly increasing. All told, a total volume of 125billion CZK in mortgages is expected for this year.

Basic interest rates of central banks

Japan	0,75%
USA	2,00%
Czech Republic	3,50%
EU	4,25%
Slovakia	4,25%
UK	5,00%
Poland	6,00%
Hungary	8,50%

Spending decrease threatens panel houses

A decrease in spending budgeted for the support of high-rise apartment houses (paneláks) might cause the development of new social ghettos. Well-off people will be able to move out from there soon and lower income people will take their place, said Vít Vaníček, the head of the Union of Czech and Moravian Housing Cooperatives (SČMBD). A program for paneláks run by the State Fund for Housing Development (SFRB) will soon have no money left in its budget, according to fund director Jan Wagner. This year, the Czech government approved only Kč 1.5 billion for the program, which is about a third of last year’s amount.

Beroun: residential complex with over 600 flats

The development group Crestyl is readying for construction of a new residential complex called Berounske strane. The project will bring to the market around 621 flats and will have a total size of about 48,000m². The first phase should be finished in 2010. The number of inhabitants in Beroun increased in the last three years by 1,000 people and local municipality expect that in the following five years the total population should increase by another 5,000 people.

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