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Big Plans Outside of Prague – Estate.cz

The construction of residential buildings in apartment complexes in the Czech Republic is led by Prague. However, interesting and large-scale development projects are also emerging outside the capital. For example, in Brno, a whole new neighborhood with thousands of new apartments will be built in the coming years. Developers also have big plans in Plzeň and in the Central Bohemian region of Kladno.

Discussions about Czech development, its problems, and future usually focus mainly on Prague. The capital city is home to dozens of development companies, has the highest demand for housing, and in recent years has been significantly affected by a housing crisis.

However, this does not mean that issues with housing availability, rising prices, and insufficient new construction do not exist in other regions. Builders are trying to meet the unmet demand in many regional cities. Many interesting projects are starting or being prepared in these areas, some of which would rank among the largest in Prague in terms of the scope and number of planned new apartments.

### Misleading Statistics

Unlike the capital city, other regions have a much smaller share of new residential construction in apartment buildings. While in Prague, out of the 6,400 new apartments completed last year, approximately 5,500 were in apartment buildings, in the regions, single-family homes dominate. Out of the 31,600 built units, over 18,000 were in single-family homes.

The vast majority of large development projects with hundreds of units are concentrated in the regional cities. However, the number of units in apartment buildings is counted not in thousands as in Prague or Brno but in hundreds. This leads to some misleading statistics – even one or two larger projects can significantly impact the year-on-year comparison. Therefore, differences in tens of percentages should be taken with caution.

In terms of the size of the apartment market in apartment buildings, the South Moravian region is in second place after Prague, mainly due to Brno. Last year, nearly two thousand apartments started construction here, and almost 2,700 were completed. The Central Bohemian region ranks third, where developers started the construction of nearly two thousand apartments last year, completing over 1,600.

Due to the worsening housing availability in the capital, the importance of cities in the Central Bohemian region, known as „within reach of Prague,“ is expected to grow. Significant development is expected, especially in Kladno, which is poised to become the residence of many people working in Prague but cannot afford their own apartment in the capital.

On the other end of the spectrum is the relatively clear leader, the Ústí nad Labem region. A socially weak region where people are more likely to leave, the lack of housing is not a concern. This results in an excess of available older apartments over demand and consequently significantly lower prices than in most other regions. In the Ústí nad Labem region, construction started on only 149 apartments in apartment buildings last year, with fewer than fifty completed.

### Awakening Market

Developers in Brno experienced a challenging year last year. A combination of high interest rates, double-digit inflation, an energy crisis, and economic uncertainty brought new apartment sales to their lowest level in the past decade. According to an analysis by Trikaya, the end of the year saw a mild recovery, but even the sale of 154 new apartments could not lift the dismal annual statistics.

Throughout 2023, only 492 new apartments were sold in Brno. The Moravian capital last saw such low numbers in 2013 when 330 units were sold. „The sale of new apartments in Brno in the fourth quarter reached about 70 percent of what can be considered the long-term market average,“ commented Dalibor Lamka, Executive Director of Trikaya.

However, the low demand favored those who had the finances to purchase their own housing or investment apartment. Prices in Brno fell below the levels of 2022, with a new apartment costing an average of around 125,000 Czech crowns per square meter. „The cheapest apartments could be found in November and December when many developers already reflected the upcoming reduction of VAT on new apartments from the original 15 to 12 percent in their price lists,“ clarified Lamka.

The quarter-on-quarter growth in sales by about a third in the last quarter of the year indicated that this year should be significantly more favorable for developers. „From our perspective, the need for new apartments is growing, and the demand is only postponed due to problematic financing and buyer uncertainty,“ stated the Executive Director of Trikaya. In other words, those who waited for more favorable conditions for buying housing last year are likely to give up on waiting for significantly cheaper mortgages this year.

### New Neighborhood for Brno

In any case, prospective homebuyers in Brno will have plenty to choose from this year and in the coming years. After years of waiting, construction will begin in several extensive development areas. The most interesting is the area around the future new main train station bordered by streets with characteristic names such as Thorny and Abandoned, which has been dubbed the Southern Quarter.

The city architect’s office in Brno prepared an urban study some time ago, according to which the area is expected to offer workspaces and housing for up to 30,000 Brno residents in the future. It is no wonder that significant players in the (not only) Brno development scene are circling around the plots in this area.

One of the first companies to start building south of the historic center of Brno is MS-Invest. At the beginning of this year, the company successfully completed the Trnitá Palace project. Over three hundred apartments were built in this project, along with nearly 13,000 square meters of office and commercial space.

The developer division of the J&T investment group also owns a roughly four-hectare plot in the Southern Quarter. J&T Real Estate has big plans for the land. The company plans to build three office buildings, dozens of shops, and more than five hundred residential units. The project is called Trio Brno and will require investments of 10 billion Czech crowns. The developer already obtained the necessary permits last year and is expected to start construction this year.

### Tesco to End This Year

Another significant businessman who sees an opportunity in the future Southern Quarter is billionaire Daniel Křetínský. His company, EP Real Estate, acquired part of the land where the new main train station will be located. Last year, Křetínský negotiated with the Brno city council about exchanging part of the parcels. However, specific plans for EP Real Estate in the area are still unknown.

### Transformation of Zbrojovka

Another large development area undergoing transformation into a new urban neighborhood is the former Zbrojovka Brno complex. The more than 22-hectare brownfield was purchased years ago by the CPI Property Group, which in 2018 had the Kuba & Pilař architects‘ office prepare a master plan for the entire area.

CPI Property Group launched the New Zbrojovka project with an administrative building labeled D4 and a hall where it will open a sales and service center for the Tesla car company. In total, the former factory area is expected to offer 300,000 square meters of office space. However, the developer also plans to include residential units. Around 2,500 apartments are expected to be built here, with the first units going on sale this summer. The construction of the new neighborhood is divided into several stages, with CPI expecting to complete the project for 22 billion Czech crowns by 2033.

Another large brownfield, formerly used as the industrial space of the Ergon factory, began transforming into the new Pod Hády Quarter by the Brno-based Trikaya development group last fall. In October, the first 170 units from the first phase went on sale. „The first residents will move into their new homes by the end of 2025,“ clarified Dalibor Lamka, the company’s Executive Director.

The developer’s plans, however, are much more extensive. In the second phase, they plan to build another four hundred units, with a total of around a thousand units expected in the project. In addition, the developer plans to build a central square for the new neighborhood, commercial spaces, and a new kindergarten building.

### Cejl Transformation

In addition to extensive construction on brownfields, many smaller projects are emerging in the Moravian capital. The Cejl district, which is located in close proximity to the historic center, is expected to undergo a much more favorable transformation in the near future. By the end of this year, the first owners are expected to move into some of the hundred new apartments in the Spilberk investor’s New Cejl project.

Domoplan, a development company, is building nearly 240 apartments in Cejl. Their Pekárenský Yard Residence project is located on Bratislavská Street, with completion expected in the first quarter of next year. The same developer is also building projects like the New Líšeň Residence, the Old Brewery Residence in Královo Pole, and the Žižkova Residence near the popular Kraví hora.

For those seeking unique housing, there are over 140 new apartments in the Diorit Residence project in the Komín district of Brno. The Diorit development company is building a residential building in a unique setting, in the area of a former quarry.

The New Myslivna project, intended for luxury enthusiasts, is being built on the site of the former Myslivna hotel, built in the 1970s according to the design of architect Josef Dvořák. The investor, who purchased the project from the Top Estate group, plans to modernize the complex and offer premium housing. With respect to nature, they aim to preserve and utilize the wooded surroundings for relaxation or as a meeting place and leisure activities for guests and the public.

Another noteworthy project is the Arboretum project with over two hundred apartments, being built by the Properity development company in the Černá Pole district. Completion is planned for next year.

### Escape from Prague’s High Prices

The third-largest development market in the Czech Republic has long been the Central Bohemian region. Cities and municipalities within sight of the capital have benefited from the extreme rise in housing prices in Prague in recent years. As a result, many Prague-based and non-Prague-based development companies have embarked on projects in this region.

However, it is not just about apartment buildings that are growing just beyond the city limits in the Prague-East and Prague-West districts. There is also a growing interest in purchasing housing in cities tens of kilometers away.

One of the most significant construction booms in the coming years is expected in the Central Bohemian city of Kladno, where several remarkable projects are in the works. EBM Partner is currently the furthest along, having started construction on the Engerth Residence project in the Ostrovec district of Kladno. A total of 125 apartments are already on sale, with completion expected in two years.

Creditas, a relatively new development company from the Creditas group, also ventured into Kladno. Towards the end of last year, the company completed the first 160 units of the New Boroviny project on the outskirts of the city. However, they plan for additional phases with hundreds of units in the future.

Similarly extensive is the New Stromovka project, which will be located near the Kladno main train station. Originally, the New Stromovka project was in the portfolio of the EBM Partner developer, but this year it was sold to the Natland Group investment group. The new neighborhood, covering more than 52,000 square meters, where over 600 apartments are expected to be built in several stages, will be built in-house. „With a similarly large area, we already have experience; a few years ago, we built a new residential neighborhood in the ninth district of Prague in the Čakovice area, and we are convinced that this helped us in negotiating and buying the Stromovka project,“ commented Natland partner Karel Týc on the transaction.

YIT Stavo, a company that bought land in the Kročehlavy district of Kladno, is also making its first foray beyond Prague. They plan to build up to eight hundred apartments in ten stages. Originally, construction was expected to start this year. However, due to complications with permitting processes, this deadline is likely to be missed.

In addition to Kladno, there is a lively construction activity in other Central Bohemian cities. For example, IV Development will complete over three hundred apartments in Brandýs nad Labem this year. The Radimský Mlýn project in Kolín, led by the Real-Treuhand developer from the Raiffeisen Immobilien group, is also noteworthy and will begin construction in the near future.

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