Overview




Since the Czech Republic joined the European Union in 2004 a radical change is expected to take place in the case of real estate as elsewhere. They have, as example, Italy, Spain, Portugal and Ireland who joined the EU earlier. Within eight years of these countries joining, the real estate prices have increased five fold. After the Second World War everything in the then Czechoslovakia was controlled by the state. The land was owned by the state. There was little room for development by individual enterprise. Changes on the real estate front in the Czech Republic are taking place slowly, but steadily.

According to quality the real estate properties in the Republic can generally be divided into those belonging to three distinct periods, those built before the war, those built during the communist regime and those built afterwards. The pre-war buildings are of very good quality and they have the highest demand. Those built during 1945 to 1989 period are of the worst quality. They were built by the government or by co-operatives with government assistance. They are mostly made of prefabricated components. No care was taken to ensure the quality of the components. These buildings are not only of poor quality, they also had a negative effect on the landscape. The buildings built between 1945 and 1989 form 58% of the total. In number they are over two million housing units and are deteriorating rapidly. No funds for maintenance are available. Those built after 1989 are of good quality and design.




Even now there is a big difference in demand for housing units between the capital city, Prague and the villages. With the Czech Republic joining the EU, many foreign companies have moved to Prague. Many more companies are expected to move into the city. Prague being at the center of Europe some companies may move even their headquarters to this place. Employment chances have increased in the city. At the moment there is no unemployment in the city. The salaries in Prague are 150% of the national average. The influx of foreign workers has also has a positive effect on the demand for rented or leased housing property. Now mortgages are also available to the advantage of the builders and prospective buyers.

In villages and smaller towns the story is different. Unemployment is still there. The people cannot afford to make purchases of housing property due to low income. They cling to the old dilapidated post war housing units because the rents are highly subsidized. Young people tend to move to cities in search employment. Now only the retired people buy properties in the villages.

Investors now find this as an opportunity. Unlike the big cities the villages have small single housing units. It is available at very affordable prices. Investors buy one or more nearby units, demolish them and rebuild them in modern lines. The advantages of the buying existing houses over the open land are many. No new building license is required. Infrastructures like connections for water, electricity and sewage are already there. They can be rented out or resold at much better prices when developments take place.

Surely the real estate scene is looking up in the Czech Republic.