Not only in media reports or real estate agency predictions, but also in the interview with Iconna Home representatives, Petr Vorba and Tomáš Volf, can you hear mention of the growing interest in not only plots of land but also cottages and other kinds of real estate, and those sometimes in places and condition that would never have sparked interest before. We asked Tomáš Votruba, an expert real estate price appraiser for a breakdown of the current situation.
The character of residential real estate can be defined and separated into the following categories based on market value: plot of land, apartment unit and family home or recreational property. Each of these has its own special position and availability on the current Czech market.
Plots of land
Currently, I feel that people are “hungry” for this type of real estate. However, it is necessary to differentiate between the two kinds – either a fully equipped lot with access to utility networks or a lot that is only being considered for a change in purpose of use, in the scope of future land-use planning. Plots of land meant for future construction usually do not have access to utility networks or are very remote. They are mostly being bought up by developers and financial groups who are storing their financial reserves in active development or speculation.
This type of real estate is becoming more and more specific due to the fact that acquiring it (be it from your own resources or through financing) is only available to a select group of interested parties, and so it becomes unavailable to others. A situation has arisen in the development of certain areas, some municipalities are on the verge of running out of plots of land to build on or lots meant for future construction based on town planning. Based purely on logic, you cannot have all the lots in a town designated for construction, especially not the agricultural ones meant for growing crops or harvesting grasses. This limited capacity has given rise to a state where demand is absolutely “hammering” the supply, which is sorely lacking. This allows for an endless pumping of unit price per square meter (UP/m2) of properties. Prices in the close proximity of Prague have risen as high as 6000 Kč/m2. When acquiring a plot of land with this price tag we get to around five million crowns without even starting construction.
I feel like people are now looking at apartment prices and thinking it must be science fiction, or at least rolling their eyes and treating them as a joke. In the recent past the UP/m2 of apartments in Prague has risen over the magical figure of 100 thousand crowns. This trend shows no intention of changing, quite the opposite actually, it keeps growing. There are several causes of this. In the case of the capital city the number of newly constructed apartments is lower than the demand. The number of interested buyers is consequently rising, be it based on demographical or migrational reasons. The current health situation has introduced a new trend in the market in the form of declining rent prices, the reason being unoccupied short term rental units. Owners of these units have opted for more secure long term renting, which meant having to compete with concurrent rental prices, or for a final sale of their property.
Beside newly constructed apartment buildings, apartments in tenement or brick buildings that require a complete refurbishment are also in favor. This gives buyers an opportunity for self-expression and the ability to create an individual space and to fit in on their own terms. The market echoes this sentiment, and apartment units meant for complete refurbishment therefore often come with very high price tags. The least favored currently are apartments which have recently been completely refurbished, where the buyer has no say in the condition of the unit.
Family homes are among the favorite sectors of Czech residential construction. Nowadays the number of people who don’t want to “build from the ground up” is virtually zero. This is a very lengthy process for the buyer, and can take up to 2 or 3 years. This time estimate is accurate for a plot of land with access to utility networks purchased in the first phase after final construction approval. Purchasing a lot that is in the process of town planning and has no utility networks attached can extend the timeline by several more years.
The most frequently used pattern for building new family homes in Czechia is without a doubt the single story bungalow either in brick or wood. Having a home of this kind built costs around 4-5 million crowns without any furnishings.
Who do I get commissioned by? Clients of banking houses or other financial institutions who are buying, refurbishing, refinancing or pledging real estate in order to provide financial means or using it as additional collateral for other purposes. I meet people from all walks of life pretty much every day. I listen to their stories and, within my limits, I strive to do the very best to help them achieve their dreams. As an appraiser I understand that time can sometimes be of the essence when purchasing property, therefore I offer expedited processing of estimates to my clients as well.
Tomáš Votruba (born in Prague in 1988) is an external real estate appraiser for banking and other financial entities. He is also in charge of consultancy services in the real estate appraisal sector of Iconna Home.
He went from a secondary technical school on to study at the Faculty of environment at the Czech University of Life Sciences Prague, then SLU Uppsala in Sweden and the AMBIS college of banking.
He previously worked for Metrostav, now the Czech association of property appraisers is available.
#Among his hobbies are aviation, horseback riding and motorcycles. His motto is: “Client oriented service.”
More can be seen on his instagram page: tommi_votruba