International Property News

Czech Property - the market is in the middle

22nd July 2009

ING Real Estate is stepping up the marketing of its lofts in the A7 Holešovice Brewery complex in Prague 7.

The heart of the scheme, the redevelopment of the historical brewery, was completed with the help of big-name architects like Jean Nouvel and Frank Gehry, along with David Chisholm, Vít Máslo and Evžen Dub from CMC Architects. The result is a mix of modern and reconstructed historical buildings with flats, offices, shops, a restaurant, a small brewery and a plaza with a fountain in the middle.

ING managed to offload the CZK 2.2bn (€84.8m) project phase by phase, selling 15,000 sqm of office space to Pramerica Financial. Of the project’s three residential phases, the first two were sold successfully, but it’s the more expensive lofts which have struggled to attract buyers.

It’s an experience that’s been confirmed by other residential developers: high-end units in the market are taking a hit. What makes it somewhat tougher, says ING spokesperson Renata Kodadová, is that the concept of the loft is still young in the Czech Republic.

“For many people the idea of what a loft looks like is vague and indistinct, known only from American films,” she says. The 76 to 137 sqm lofts are on offer at CZK 85,000 (€3,276) per sqm. Earlier phases went for under CZK 45,000 per sqm.

With that in mind, ING is going forward with another Prague residential scheme in Modrany, with plans to target the midmarket segment with prices of around CZK 40,000 per sqm.

“We have internal financing from ING Bank, so it’s not a must to get 30 percent pre-sales,” says Kodadová. But she adds that pre-sales are obviously always welcome. “We would like to have up to 25 percent pre-sold just to know there is a market for the product.”

Also in the planning stages is a mixed-use office and residential project on Drnovská Street near Evropská in Prague 6, but this is currently on the waiting list, as well as the redevelopment of the Bráník Brewery in Prague 4 into flats.

“Neither residential nor office is what ING would plan to focus on currently,” says Kodadová, adding that the Modrany scheme is an exception as it’s now too advanced to postpone. She says the company’s focus is now shifting to retail. “The expansion of Nisa has set the way we would like to go.”

Source: CIJ Journal