Prague Property Market Overview

In many ways Prague is one of the gems in the Central and Eastern European crown.

Prague’s history and beautiful architecture attract millions of tourists (and their money) every year and is a pleasant place to live.

Its geographical position in the centre of Europe makes it a magnet for business. The local economy is very strong which is in part supported by the huge amount of FDI that has been, and still is being, invested in and around the city.

Prague is a major hub for warehouses and distribution companies, this is only likely to continue as the network of new motorways near completion over the coming years. The IT sector is also very strong in Prague both from a local and international perspective. It is said the Czech Republic has more IT professionals that any other recent EU entrant country.

Continued economic success has led to unemployment in Prague around 2%, and wages rose 10.6% in 2007.

The result is more people have more money to spend, thus increasing affordability to buy property which many locals chose to do. This trend is likely to continue for the foreseeable future giving a healthy base to the property market in Prague.

Over the last few years there had been a trend for developers to build cheaper properties nearer the edges of the city that people could afford, especially compared to the centre where prices have long been high.

Often there is only the perception that the central areas are expensive, and good deals can still be found.

We often recommend buying in areas that, location wise, find a good balance between being central and yet still being affordable. Good transport links are a large bonus for rental apartments. This provides a low risk good return investment strategy.

Some of these areas are still regenerating such as Holesovice (Prague 7) and Karlin (Prague 8) and we believe areas such as Smichov (Prague 5), Zizkov (Prague 3) and Nusle (Prague 4) will offer some excellent opportunities for the investor if one avoids the overpriced options.

The rental market has been static for a number of years, though typical yields are still around the 4-6% mark. We predict the rental market will strengthen in around 2 years time once property prices have risen even further and the deregulation of rents that is currently taking place see its full effect on the market.

In summary, Prague is a must buy location for any overseas property investor. The combination of low risk, good finance, good medium growth prospects and good rents make it an all round winner. The financial crisis is only accentuating these qualities and buy opportunities will abound in 2009.

Prague districts