The second half of 2023 brought a significant influx of new apartments to the Prague real estate market. Developers completed 4520 units in 46 projects from July to December. Together with the first six months of the year, the total construction reached 6690 units, the highest annual volume since the crisis year of 2009. According to real estate consultancy firm iO Partners, the high number of projects initiated in 2021 is the reason behind these favorable numbers. However, the second half of 2023 showed a significantly modest development in terms of new construction starts. Construction of 1990 new residential units in 18 projects began during this period, representing a 61% increase compared to the extremely weak first half when developers postponed the launch of new projects due to market conditions. Nevertheless, this also indicates a continuing slowdown in residential construction in the capital city. Overall, in 2023, construction began on 3220 units, the lowest value since 2009. Due to persistently lower demand, the number of units on the market increased to 5990, the highest value in the last 10 years. There has also been an increase in the number of completed units still awaiting buyers, with around a thousand units currently available, the highest since 2014.
CPI Property Group has launched the sale of a new development project called Žižkovské zahrady, which includes 210 residential units ranging from 1+kk to 6+kk in Prague’s Žižkov district on the edge of Vítkov Park. The final design of the project, created by the MS architekti studio led by chief architect Michal Šourek, aims to reflect the character of the local older buildings. Construction of the project is set to begin in the second half of this year, with completion expected by the end of 2026.
YIT Stavo has kicked off the year with four projects where prospective homeowners can choose their own units. The company started a new project, Sija Kamýk, at the beginning of the year. Additionally, they plan to launch projects Toivo Roztyly, the Tampere phase in the Suomi Hloubětín complex, and the third phase of Ranta Barrandov later this year, with a total of nearly 540 units set to hit the market. The company has also announced preparations for its first project outside of Prague, in Kladno, although specific timelines have not yet been disclosed.
The Exafin development group’s plan to build three buildings with nearly 200 units in the Michelangelo Street in Strašnice, Prague 10, has faced opposition from the local authorities. The Prague 10 district does not agree with the project and intends to discuss further steps with the investor. Local residents have criticized the project, claiming it is oversized and will overshadow neighboring buildings. They also raise concerns about the traffic situation in the area. A petition has been launched against the project, which is planned to be built on green spaces between the Tesco supermarket building and the existing structures.
The Getberg development group, originally founded by Russian entrepreneur Yegor Khlebnikov, is facing financial difficulties. The group has vacated its headquarters in Prague’s Libeň district and owes money to some clients. According to Seznam Zprávy, at least two of the group’s companies are not meeting their financial obligations. One subsidiary, Collection Kolovraty, owes its clients millions in deposits and land in Kolovraty near Prague. Collection was supposed to prepare and sell the land for individual residential construction by the end of 2020. The company has failed to do so, leaving clients in a difficult situation.
The possibilities for developers to build wooden structures have expanded from this year onwards. New regulations allow for the construction of buildings with a wooden structural system up to a fire height of 22.5 meters, using an engineering method. The use of wooden structures has been confirmed based on a joint expert opinion from relevant institutions published at the end of last year in the Bulletin of the Office for Technical Standardization, Metrology, and State Testing. Systematic changes to relevant standards are expected to take place in the first half of next year.
In terms of industrial and logistics spaces, the Czech Republic leads in the region of Central and Eastern Europe (CEE) in terms of the most industrial and logistics spaces per thousand inhabitants. Additionally, owners report the lowest vacancy rates compared to neighboring countries. The total area of industrial and logistics spaces in the CEE region at the end of 2023 was nearly 61.5 million square meters. The Czech Republic accounts for 19% of this area, with 11.7 million square meters. According to a study by the consultancy firm Cushman & Wakefield, the Czech Republic has 1104 square meters of these spaces per thousand inhabitants. The high volume of construction and tenant interest demonstrates the attractiveness of the Czech environment for investors. However, the approach of municipalities to the construction of industrial zones varies, with some seeing them as an opportunity to create jobs, while others oppose building halls due to concerns about traffic congestion or loss of agricultural land.
Passerinvest completed the new office building Roztyly Plaza in Prague 11 near the Roztyly metro station in March. The project has expanded the Prague office market by 21.7 thousand square meters of state-of-the-art office space. At the time of completion, the building was already half occupied by tenants. The ground floor of the building offers 1.6 thousand square meters of retail units. The architectural design of the building was created by the Aulík Fišer architekti studio.
AFI City, a kancelářská budova developed by AFI Europe in Prague on Kolbenova Street, is fully leased. New tenants include logistics specialist Hegelmann Transporte, who plans to relocate their Czech headquarters here, and the self-service restaurant Delirest. Škoda Auto has also exercised options to expand its existing space. Other tenants include interior design specialist Nüssli and French pharmaceutical company Pierre Fabre.
Trikaya Real Estate Group sold the Landmark Office Building project in Brno at the end of February. The project, located at the corner of Koliště and Milady Horákové streets near the center of Brno, was acquired by SUDOP Real. The original intention of Trikaya was to expand its portfolio, primarily focused on residential development and shopping center renovations, with a premium office building. The decision to sell was made to focus on the development of the Čtvrť Pod Hády project.
Developer of industrial and logistics properties, VGP, began construction on additional warehouse halls in the VGP Park Ústí nad Labem project in March. One of the halls is being prepared for the Czech logistics company RTR-Transport and Logistics. The company will lease 10.8 thousand square meters of storage and office space out of a total of 29 thousand square meters. The new hall is being built to a BREEAM Very Good green certification standard, with completion expected in the fourth quarter of this year.
The Máj department store, which began renovations in the summer of the previous year, will open to the public in June. The reconstruction, carried out by the construction company Metrostav, is expected to cost around 4 billion Czech crowns. Customers at the new Máj will find a Tesco supermarket, pharmacies, drugstores, cafes, cosmetic shops, and a wine store. The facade of the building will feature a work by sculptor David Černý – two several-meter-tall moving sculptures of butterflies, with their bodies resembling Spitfire fighter planes. The artwork is intended to honor Czechoslovak pilots who fought in World War II.
The Natland investment group, led by Tomáš Raška, acquired the Stromovka project in Kladno in mid-February. The project, located near Kladno train station, will be the company’s first development project outside of Prague and its second-largest project to date. The EBM Group, a family-owned development company, sold the land with a valid building permit to SUDOP Real. The site covers over 5.2 hectares and will feature over 600 residential units and various commercial spaces. Construction is expected to begin next year, with an estimated cost of around three billion Czech crowns.
The international development group UDI Group selected an architect for the second phase of the Apartment Buildings Brno Husovice project in a competition. The first phase, designed by the Hlaváček & Partner studio, will consist of approximately 268 accommodation units. The second phase, to be designed by the Arch.Design studio, will include 650 accommodation units. The UDI Group aims to provide medium to long-term accommodation on the site, including apartments with reception areas, shops, and service facilities.
Domoplan, a Brno-based development company, will officially open the Starý pivovar residence this spring. New homeowners will be able to start moving into the new apartments in the Královo Pole district of Brno. Out of the 46 units, there are still 16 available for interested buyers. The Starý pivovar residence offers pleasant family living in a quiet location. The concept of energy smart management will also assist residents. Additionally, the developer plans to create a new park with a playground and outdoor fitness facilities next to the building.
There is a growing interest among Czechs in investing in foreign recreational properties for returns, according to the real estate agency Luxent – Exclusive Properties. Buyers are attracted to the attractive returns from such investments. Currently, rental yields in Prague range between three and five percent, while in Croatia and Spain, they range from seven to 11 percent. In Dubai, depending on the location, annual returns can exceed 20 percent. Popular destinations now include Southern Europe, the Middle East, Central America, and Eastern Asia.
Real estate consultancy firm 108 Real Estate is expanding into India. The new branch in Delhi will focus on the industrial property segment and aims to develop services in Mumbai, Bengaluru, and Pune. The favorable demographics, growing economy, and purchasing power in India were cited as reasons for the expansion. The Indian branch will initially focus on advising on the construction and occupancy of production spaces, warehouses, and offices.
Polish developer 7R is entering the Czech industrial property market. The company will build a warehouse hall near the D1 highway in the Vysočina region for 750 million Czech crowns, for which it has already obtained a building permit. The construction will cover an area of 26 thousand square meters, with completion expected in the third quarter of 2025. The 7R Park Lavičky D1 Highway facility will be located near Velké Meziříčí, 50 kilometers from Brno and 135 kilometers from Prague. This investment is just the beginning of 7R’s plans in the Czech Republic, as the company aims to further expand its presence in the future.
In conclusion, the real estate market in Prague and the Czech Republic is experiencing various developments and challenges across residential, commercial, and industrial sectors. From a surge in new apartment completions to the expansion of international developers into the country, the landscape is dynamic and evolving. As the market continues to adapt to changing demands and economic conditions, stakeholders will need to navigate these trends to make informed decisions in the real estate sector.