Home Searching within the Czech Republic: A Restored Gem in Prague’s Historic Coronary heart

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House Hunting in the Czech Republic: A Restored Gem in Prague’s Historic Heart

This two bedroom apartment is located on the fifth floor of a Grade I listed building on Parizska Street, a historic strip of Art Nouveau design and high-end shopping in the center of Prague. The 1,260 square meter house, built in 1907 and renovated in 2012, is fully furnished with mostly custom-made pieces.

"This house is special because of its unique location," said Jan Kolar, the agent for Cotheby & # 39; s International Realty in the Czech Republic who has the listing, adding that it "is for its mix of Art Nouveau and Historicism architecture and its dominance stand out from the tower in the front, which no visitor to Parizska Street can miss. "

The work done in 2012 was a complete reconstruction, said Kolar, including “everything from creating the current layout, new floors, new bathrooms, new pipes, new electrical cables to bespoke built-in furniture, kitchen and wall paint, wallpaper, decorative ceilings ", he said.

The entrance hall with half a bath is in the middle of the apartment. The living room, dining room and open kitchen are at the front, with Macassar ebony floors and large original windows (also restored in 2012) overlooking the street. A wooden sliding glass door separates the dining area from the living room with built-in bookshelves. The kitchen has quartz countertops and Miele appliances, plus a door that leads to a balcony.

A small hallway with a closet leads to the two bedrooms, both with en-suite bathrooms. The smaller bedroom has a balcony.

Several updates have modernized the apartment while maintaining its historical look: the entrance hall is painted in Venetian walls and the crystal chandeliers are from the Czech brand Preciosa.

Parizska Street runs through the heart of Prague, the capital of the Czech Republic, from the Old Town Square to the Vltava River. Boutiques and restaurants line the thoroughfare, and historic sites are everywhere, including the 14th-century Charles Bridge, the 15th-century Prague Astronomical Clock, and the city's Jewish Quarter. Václav Havel Airport Prague is a 20- to 30-minute drive away.

Prokop Svoboda, co-founder and managing partner of Svoboda & Williams, Christie's exclusive subsidiary for the Czech Republic and Slovakia, described the Prague property market as resilient during the pandemic, thanks to a combination of factors including low interest rates Abolition of a real estate transfer tax and reduced housing supply.

"The coronavirus crisis has slowed growth in many sectors of the economy, but the Prague real estate market has proven resilient throughout the year," he said.

Prices in Prague, as in the rest of the country, rose steadily between 2010 and 2019, according to the Czech Statistical Office, with growth accelerating from 2016. By 2020, prices had risen 51 percent compared to 2010 and far outpaced wages. According to a 2020 study by financial consultancy Deloitte, Czech buyers have to pay 11.4 times the average annual salary to buy a 750-square-meter house. This is the highest rate in Europe.

Peter Yusufi, general manager of the Czech Republic and Slovakia at Sotheby & # 39; s International Realty, said buyers in Prague and elsewhere view real estate as a "safe bet in the face of global inflation fears" and currency depreciation. This, combined with increased demand for second homes and investors building “large portfolios of rental units”, has resulted in increased demand for real estate during the pandemic.

The abolition of the real estate transfer tax triggered by the pandemic last year pushed the purchase further. Previously, buyers paid a 4 percent tax on the purchase price.

Mortgage rates fell below 2 percent, resulting in a record number of approved mortgages in 2020, although prices continued to rise, according to a fourth-quarter investment report by Colliers. Now those interest rates are starting to rise again: "Some banks have started to raise the interest rates on new mortgages slightly in hopes of slowing demand in the face of record prices," said Yusufi.

Mr Svoboda said a chronically slow building permit process was behind the low supply. "On average, it takes property developers almost 10 years to get planning permission," he said. "Streamlining and speeding up efforts were halted due to the coronavirus crisis, and developers started building just 3,246 homes last year – a 40 percent decrease from last year."

A new law is supposed to speed up the building process, but "many experts agree that the new building law is definitely not flawless. It remains to be seen how this will affect the building process," he said.

Still, buyers are choosing to invest in real estate instead of putting their money in savings accounts.

“Demand is so high that projects are sold out before they go public,” said Pavel Parizek, managing director of CZECH POINT 101, a real estate agency specializing in investment properties, adding that his company “has a list of investors who want to buy , and we give them the properties before we advertise them. "

There are other factors that keep supply low and prices high. For one, the pandemic has left many of the 13,000 short-term apartments in Prague empty without tourists having to fill them, said Filip Sejvl, owner and managing partner of Philip & Frank, a luxury real estate agency in Prague. Many of these units have been converted to long-term rentals, reducing rental rates by around 15 to 20 percent, and in some cases by as much as 50 percent.

Even then, the owners held on to their rental properties. "They are waiting for the tourists to come back," said Sejvl.

Based on data from the Czech Statistical Office and Deloitte, Mr Sejvl estimated that the average price for a new apartment in Prague was 114,000 kroner per square meter in January 2020 and 123,000 kroner per square meter ($ 545 per square foot) in April 2021.

The most expensive area is the central Prague 1 district, much of which is a UNESCO World Heritage Site. The houses there are about 203,000 kronor per square meter on average. A little south in Prague 2, the average is 169,000 crowns per square meter, said Sejvl.

Popular areas outside the capital where buyers are looking for second homes include the town of Cesky Krumlov, the town of Karlovy Vary, known for its mineral hot springs, and the ski resort of Spindleruv Mlyn, Yusufi said.

Mr Svoboda said that in 2020, 78 percent of his company's buyers were Czech, while the remaining 22 percent were mostly Slovaks, Russians and Italians.

According to Sejvl, the buyers mainly come from the neighboring countries of Slovakia, Germany and Austria as well as Italy, Holland, France and Great Britain. Outside the European Union, they come from Russia, Ukraine, the USA, Israel and Vietnam. Around half of the buyers in his company are foreigners.

Mr. Yusufi said that Prague has historically served as a target market for buyers from Russia, China and Vietnam. "Now we are seeing the second generation of Vietnamese immigrants, born and educated in the Czech Republic, entering the real estate market," he said. "These buyers have significant purchasing power and have proven to be savvy investors."

Monika Rutland, managing partner of the Prague law firm Rutland & Partners, said that properties are sold in Czech crowns, but for the luxury market they can be quoted in euros. (The Czech Republic joined the European Union in 2004 and will eventually have to adopt the euro as its official currency.)

Foreigners can buy real estate in the Czech Republic without restrictions, but it is more difficult for foreigners to get a mortgage. "The banks have put stricter rules in place. If you don't have a living and working income in the Czech Republic, it is basically almost impossible to get a local mortgage," she said.

Czech; Czech koruna (1 koruna = $ 0.048)

The annual property tax on this apartment is $ 140 and the monthly condo fees are $ 600, Kolar said.

Jan Kolar, Czech Republic Sotheby & # 39; s International Realty, 011-420-721-645-703; sothebysrealty.com

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