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Metro Residence, Prague, Czech Republic
After well over a year we’re very proud to be launching our first investment opportunity in Prague.
Update: this development is now almost sold out, only a few 2 bed units remain.
Summary
Metro Residence is a high quality development in an “established developing” area of Prague just minutes from the city centre. The development is, fortunately, situated less than 1 minutes walk from a metro station which itself is only 2-3 stops from the city centre.
Metro Residence offers the chance to buy into a high quality project, in a great location at a discounted price. This area of Prague 8 is not only a growth area but one well suited to the rental market. This combination of factors make Metro Residence a first class investment.
The area of Karlin, Prague 8, is adjacent to the city centre and was devastated by the floods in 2002. Since then it has being undergoing a rapid transformation with new residential and commercial developments, renovated buildings and upgraded parks and streets. The area is now an increasing desirable place to live, just a stone’s throw from the city centre (walking distance), and is increasing populated by small cafes and bars.
• Large discounts off list prices (up to 23%)
• High quality and efficient design at an affordable price
• Prague property market has bottomed out and good future growth is expected
• Apartments are well designed and very suitable for rentals
• Great transport links (next to metro and tram)
• 15/85 payment terms
• Best mortgage finance in Central & Eastern Europe
This is a chance to buy in an established growth location of Prague just minutes from the centre at time when the Prague market has bottomed out and good future price growth is expected. Metro Residence combines all aspects of high quality design and materials, excellent location and discounted prices – not something that comes along everyday of the week.
Download:
Investment Report,
Price Spreadsheet
and
Floor Plans.
Market Analysis
The Prague property market is well renowned as being one of the best investment locations in the world. It combines strong economic fundamentals, with good mortgage finance, steady capital growth and reliable rentals.
Leading up to EU entry in 2004 the Prague property market grew steadily. However, as the Czech Republic joined the EU developers, who had held back stock, flooded the market with properties, leading to market stagnant for 18 months, despite the good economic fundamentals at the time. From 2005 to 2008 property price growth was in the region of 15-20% per annum, but again a combination of developer greed and a worldwide financial crisis has seen the market fall back 20% from its high of mid-2008 to the present day.
Today we’re now at a point where the market has bottomed out and is unlikely to fall further. This represents a great time to buy as the market is now well positioned for future growth.
Some quick facts/reasons why investing in Prague really adds up:
- continued economic success, and reduced taxes, is pumping huge amounts of money into people’s pockets
- low risk blue chip location
- very low property buying costs
- great mortgage finance
o some of the lowest base rates in Europe
o 80-90% LTV available
- best and most established rental market in CEE
- healthy capital growth rates expected
- no need for an EU card or company
Download:
Investment Report,
Price Spreadsheet
and
Floor Plans.
Prices
| Prices | 2.8m – 12m CZK
(£93,000 - £400,000) |
| Discount off list price | Up to 21%. See spreadsheet for more details. |
| Payment terms | 15% deposit
85% completion (November 2009) |
| Finders Fee | nil |
| Legal Fees | 29,750 CZK (inc VAT) per unit |
Price Comparisons
Metro Residence prices range from 52-78,000 CZK/sqm, which is a lower than the average price in the area, especially for such good quality.
We rate Metro Residence as a high quality development and we’ve seen many much lower quality developments being called “luxury”.
There are some other new build projects in the immediate vicinity which have completed in the last year. Two include River Diamond and Corn Lofts.
| Development | Typical prices (without VAT & garages) | Price difference | Comments |
| Metro Residence | 52 – 78,000 CZK/sqm | - | | |
| River Diamond | 70 – 90,000 CZK/sqm | 35% | Worse location on a busy road, smaller windows, similar internal quality. |
| Corn Lofts | 66 – 82,000 CZK/sqm | 27% | Similar location, worse internal design but similar internal quality. Garages are also 60,000 CZK more expensive |
As you can see our discounted prices on Metro Residence are substantially cheaper and, furthermore, the location of Metro Residence is superior to the other two comparables. The internal fittings of the above comparables are similarly very high but the internal design of Metro Residence makes better use of space and thus gives the investor better value and better rental returns.
In addition to 15/85 payment terms we have negotiated a special discount off the list price, giving investors a unique opportunity to buy in quality development, in a great location at an affordable price.
Download:
Investment Report,
Price Spreadsheet
and
Floor Plans.
Location
Metro Residence is located on Krizikova street, in the heart of Karlin, Prague 8.
The area is adjacent to the city centre, the river Vltava and Vitkov hill.
In less than 1 minute residents of Metro Residence can reach Krizikova metro station, which is on the yellow line, and only 2 or 3 stops to the city centre. This kind of location will always do well over the medium and long term (not to mention attracting good tenants).
The tree lined streets take you to numerous small parks as well as being only 5 minutes walk to Vitkov hill and the river Vltava.
Being a small development next a metro station reduces the risk of oversupply which is great protection for investors from a rental and resale point of view.
The immediate area is graced with small tree lined streets, which lead to small parks and churches.
Numerous bars and cafes have sprung up in recent years to cater for the increasingly wealthy residents. As the regeneration continues and new upwardly mobile residents move in the area is gaining an increasingly cosmopolitan feel.
We describe the area as “established developing” as opposed to “developing”. Over the last 5 a lot of regeneration has taken place and has already established the area as up and coming. So yes more development will take place in the future but it’s very far from a dead zone where no-one lives. In fact is this perfect combination of being already established while clearly going to be a sought after area, close to the city centre, in the future which makes it so attractive for investors.
Download:
Investment Report,
Price Spreadsheet
and
Floor Plans.
Development
Metro Residence is made up of three buildings (A, B and C), with 9 floors, each having its own entrance.
There will be 112 apartments built in total – hence the risk of rental & resale market oversupply is naturally minimized, and on this point this development has not been promoted to any other investor groups, only to the local market, which again help reduce over supply problems.
The main entrance is located on the street side and the other 2 entrances are in the internal courtyard.
This will be a gated development and have 24 hour security.
On the ground floor will be commercial spaces that are designed for multi-functional use.
There will be an underground garage on 2 floors. Each apartment has the possibility of having its own parking space and special places are available for disabled people.
The purchase of parking is not compulsory on this development although it is very important both from a rental and resale perspective with the ever increasing number of Czech’s owning a car. Furthermore, we can often rent parking spaces out separately at higher yields than you can get for the apartment, thus long term it’s always a good idea to purchase a parking space.
Kitchens are not included in the purchase price. We have our own in house kitchen designer who will ensure each apartment is fitted out with a suitable kitchen. This will be arranged nearer the time of completion. Current estimates indicate that one should budget around 140,000 to 200,000 CZK for a good quality kitchen (depending on the size and shape). Property Investment International has a full program available for the sourcing, design and installation of kitchens at a very competitive price.
Download:
Investment Report,
Price Spreadsheet
and
Floor Plans.
Mortgages
The Czech Republic has the best (and easiest to obtain) finance available in the whole of Central and Eastern Europe, as well as some of the lowest base rates in Europe.
| Type | Rate |
| LTV | 80-90% typical |
| Interest Rate | Currently around 5.5% |
| Term | Up to 30 years |
Refinance and non-status mortgages are also available (subject to status) in the Czech Republic.
Interest only mortgages are not currently available in the Czech Republic.
The finance market for foreigners in the Czech Republic is developing all the time and thus refinancing at a high price in the future should be relatively straight forward.
Please contact us for a quick and easy mortgage quote.
Download:
Investment Report,
Price Spreadsheet
and
Floor Plans.
Rentals
We expect Metro Residence to rent well and above the average for the area.
The key reasons for this development being desirable for rentals are:
- located less than 1 minutes walk from a metro station, and only 2-3 stops from the city centre. With a location like this you can’t go wrong and there will always be demand.
- great internal design, efficient use of space, high quality materials and large windows giving good light
Given the high quality design & build and the great location we expect this development to rent very well. Furthermore, deregulation of regulated tenancies and area regeneration will push up rents substantially in the area over the medium term.
The development has been designed with rental in mind with good efficient use of space and sizing.
In the last 9 months a lot of supply has hit the Prague rental market and subsequently rents have dropped by around 30%. This situation has now stabilised with rents neither increasing nor decreasing at this moment.
Looking at current comparable rental prices in the area we predict that a typical unit will rent at around 300 CZK/sqm/mth for the smaller units and around 250 CZK/sqm/mth for the larger units, with parking spaces renting at 2,000 – 3,000 CZK/mth.
This gives typical yields of around 4-6% (unit dependent).
However, as the Prague rental market starts to pick up again Metro Residence will be very well positioned enjoy increased rents and yields. Even if the rental market rebounds back 30% to the level it was last year the rental yields would be very healthy indeed.
Property Investment International has a full rental program in place to take care of the Letting & Management aspects of your property. In addition we also have our own Czech real estate agency which facilitates all of our lettings and resales.
Download:
Investment Report,
Price Spreadsheet
and
Floor Plans.
Register
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