Czech Republic house hunt: a restored gem in the historic heart of Prague
A carpet on the top floor in the Art Nouveau corridor in Prague
$2.45 MILLION (51.4 MILLION CZECH CORUNA)
This two-bedroom apartment is located on the top floor of an iconic building on Parizska Street, a historic strip of Art Nouveau design and upscale boutiques in central Prague. The 1,260 square foot home, built in 1907 and remodeled in 2012, is fully furnished with mostly custom pieces.
âThis house is special because of its unique location,â said Jan Kolar, the broker of the Czech Republic Sotheby’s International Realty, who has the listing, adding that it âstands out for its blend of Art Nouveau architecture. and historicism, and its dominant tower at the front that no visitor to Parizska Street can miss.
The work done in 2012 was a complete rebuild, Kolar said, including “everything from creating the current layout, new floors, new bathrooms, new pipes, new electrical wiring, to furniture. custom built-in, kitchen, mural, wallpaper, decorative ceilings, âhe said.
The entrance hall, with a shower room, is at the center of the apartment. The living room, dining room and open kitchen are to the front, with Macassar ebony floors and large original windows (also restored in 2012) facing the street. A sliding glass door with wooden frame separates the dining area from the living room, which has built-in shelves. The kitchen has quartz countertops and Miele appliances, as well as a door to a balcony.
A small hallway with a cupboard leads to the two bedrooms, both with en suite bathrooms. The smaller bedroom has a balcony.
Several updates have modernized the apartment while preserving its historic appeal: the entrance hall has Venetian mural painting and the crystal chandeliers are by the Czech brand Preciosa.
Parizska Street runs through the heart of Prague, the capital of the Czech Republic, from Old Town Square to the Vltava River. Shops and restaurants line the thoroughfare, and historic sites are all around, including the 14th-century Charles Bridge, the 15th-century Prague Astronomical Clock, and the city’s Jewish Quarter. Prague VÃ¡clav Havel Airport is a 20 to 30-minute drive away.
Prokop Svoboda, co-founder and managing partner of Svoboda & Williams, Christie’s wholly-owned subsidiary for the Czech Republic and Slovakia, described the Prague real estate market as resilient during the pandemic thanks to a combination of factors, including high rates of low interest, the repeal of a land acquisition tax, and a reduced supply of housing.
âThe coronavirus crisis has slowed growth in many economic sectors, but the Prague real estate market has proved resilient to it throughout the year,â he said.
Prices in Prague, as in the rest of the country, increased steadily between 2010 and 2019, according to the Czech Statistical Office, with more accelerated growth from 2016. In 2020, prices had increased by 51% compared to their 2010 levels, far exceeding wages. growth. According to a 2020 study by financial consulting firm Deloitte, Czech buyers must pay 11.4 times the average annual salary to buy a 750 square foot house, the highest rate in Europe.
Peter Yusufi, Managing Director of Sotheby’s International Realty in the Czech Republic and Slovakia, said buyers in Prague, as elsewhere, view real estate as “a safe bet in light of global fears of inflation” and devaluation of the currency. This, along with increased demand for second homes and investors picking up âlarge portfolios of rental units,â led to increased demand for real estate during the pandemic.
The repeal of the property transfer tax last year, triggered by the pandemic, has further boosted buying. Previously, buyers paid 4% tax on the purchase price.
At the same time, mortgage rates fell below 2%, according to a fourth-quarter investment report from Colliers, leading to a record number of mortgages approved in 2020, even as prices continued to rise. Now these rates are starting to rise again: âSome banks have started to marginally increase interest rates on new mortgages in hopes of slowing demand given the record prices,â Yusufi said.
Mr Svoboda said a chronically slow building permit process was behind the low supply. âOn average, it takes nearly 10 years for developers to get a building permit,â he said. “The rationalization and acceleration effort has been halted due to the coronavirus crisis, and developers started construction of just 3,246 apartments last year, a 40% year-on-year decline.”
A new law aims to speed up the construction process, but “many experts agree that the new construction law is certainly not flawless, so it remains to be seen how it will affect the construction process”, did he declare.
Yet buyers are choosing to invest in real estate rather than park their money in savings accounts.
“The demand is so high that the projects are sold before they are even made public,” said Pavel Parizek, managing director of CZECH POINT 101, a real estate agency specializing in investment property, 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. On the one hand, the pandemic has left many short-term Prague apartments empty with no tourists to fill them up, 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, which has lowered rental prices by around 15-20%, and in some cases as much as 50%.
Even then, the owners retained their rental properties. “They are waiting for the return of the tourists,” said Mr 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 crowns per square meter ($ 505 per square foot) in January 2020 and of 123,000 crowns per square meter ($ 545 per square). foot) in April 2021.
The most expensive area is the central district, Prague 1, much of which is a UNESCO World Heritage Site. Homes there are on average about 203,000 crowns per square meter ($ 900 per square foot). Just south of Prague 2, the average is SEK 169,000 per square meter ($ 750 per square foot), Sejvl said.
Popular areas outside the capital, where shoppers are looking for second homes, include the town of Cesky Krumlov, the town of Karlovy Vary, known for its mineral thermal springs, and the Spindleruv Mlyn ski resort, Mr. Yusufi.
Who buys in Prague
Mr Svoboda said that in 2020, 78% of buyers for his business were Czechs, with the remaining 22% mostly being Slovaks, Russians and Italians.
Mr Sejvl said buyers came mainly from countries bordering Slovakia, Germany and Austria, as well as Italy, the Netherlands, France and Great Britain. Outside the European Union, they come from Russia, Ukraine, the United States, Israel and Vietnam. About half of the buyers of his business are foreigners.
Mr. Yusufi said that, historically, Prague has served as a destination market for buyers from Russia, China and Vietnam. âNow we are seeing the second generation of Vietnamese immigrants born and educated in the Czech Republic entering the real estate market,â he said. “These buyers have significant purchasing power and have proven to be savvy investors.”
Monika Rutland, managing partner of Rutland & Partners, a Prague law firm, said the properties are sold in Czech crowns but may be listed in euros for the luxury market. (The Czech Republic joined the European Union in 2004 and must eventually adopt the euro as its official currency.)
Foreigners can buy real estate in the Czech Republic without restrictions, but it is more difficult for non-residents to obtain a mortgage. âThe banks have introduced stricter rules and basically if you don’t have income from residency and employment in the Czech Republic it’s almost impossible to get a local mortgage,â she said. .
Languages ââand currency
Czech; Czech crown (1 crown = $ 0.048)
Taxes and fees
The annual property tax on this apartment is $ 140 and the monthly condominium fee is $ 600, Kolar said.
Jan Kolar, Czech Republic Sotheby’s International Realty, 011-420-721-645-703; sothebysrealty.com
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