Published on 17 September 2005 at 12:26 pm
Filed under: Europe:- Czech Republic Property Guides » Czech Republic for Property Investors
Investment into the property market in the Czech Republic from overseas investors really began to take hold in 2004 when the country joined the EU. Since then real estate buyers have been attracted to the potential rental yields and capital growth available in some of the country’s major cities where demand for rental and resale property from domestic buyers is beginning to heat up.
The Czech Republic is a landlocked, former Communist central European country with an incredibly strong and prosperous economy which offers property investors a wealth of alternative investment opportunity - read on to discover more!
Of all the former Communist countries in Central and Eastern Europe, the Czech Republic - which only held its first democratic elections since 1946 back in 1990 - is THE most successful by far. It has a very ambitious, intelligent and entrepreneurial work force and a forward thinking and determined government who are successfully transforming the country into one of the highest producing in Europe.
In 2004 both manufacturing and the service sector saw growth in excess of 50% while the Czech Republic’s exports grew in excess of 40% - both factors help underpin the undeniably strong Czech economy.
The net result of all this is that the domestic market is getting wealthier, purchasing power is increasing, demand for a very Western standard and style of living is increasing and as yet this demand, particularly in the real estate sector has yet to be fulfilled. Rental demand in Prague and Brno for quality, modern apartments is massive and with interest rates in the Czech Republic low and lowering, so the availability and affordability of mortgages becomes more widespread for more people. This is increasing the numbers of local people who can afford to buy property.
Now this fact is absolutely fundamental to property investment across the Czech Republic. Apart from in Prague and in a handful of ski resorts the country, the Czech Republic does not have a massive tourism market. Therefore any investment into real estate has to focus on affordability and attraction to the local market. This basically means that if you’re considering buying to let in the Czech Republic you need to ensure you’re purchasing units that local people will want to rent - currently the most popular, easy to rent and highest yield generating property types are modern, well serviced family apartments for example.
Next up, any overseas buyer looking at the Czech Republic with an eye on long term capital growth and profit from resale has to understand that they will most likely be relying on the local market to buy that property. Overseas retirees are not moving to the country, second home owners are not inspired by the lack of sun, sea and sand and there is a limited international, expatriate population seeking homes to purchase in the country.
It can and will pay to speculate though because local purchasing power is increasing all the time and where the local economy may be able to purchase apartment units now, in the medium to longer term they will be able to afford larger homes. Underpinning this critical projected growth in domestic personal wealth are many factors and it is these factors that are giving overseas property investors the confidence to move into the housing market in the Czech Republic.
Firstly the county is currently privatising the entire banking, telecoms and energy sectors which is predicted to add substantially to the inward flow of foreign investment.
Secondly, the country is in receipt of grant money from the EU totalling in the region of EUR 2.6 billion and with inward foreign direct investment at an all time high, the entire country is benefiting.
Major overseas corporations such as DHL and Exxon Mobil are moving substantial operations to the Czech Republic creating a great many employment opportunities.
And as stated, personal wealth in the Czech Republic is predicted to blossom therefore the entire real estate sector is secure and the growth potential within it has yet to be tapped into and realised by many overseas investors. Those investing in the right kinds of property in the Czech Republic now will reap the substantial potential returns in the future.
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