How did the pandemic affect the property market?
During March and April this year, the property market was in a highly uncertain state. Countless theories emerged predicting developments in the Czech property market, which had been affected by several factors. Since the beginning of summer, however, we have seen a significant improvement in the overall situation, and the initial stagnation in all property transactions has disappeared. What can be expected from the property market over the coming year, and should those interested in property investment enter the market now? Or is it worth waiting? David Novotný, founder of the independent real estate company Bohemian Estates International, provides the answers.
It has operated on the Czech market since 2006, when it was founded as a company offering both small and large investors genuinely comprehensive solutions in property management and investment in residential and commercial properties. Bohemian Estates International now has physical branches in Prague, Brno and Ostrava, managing over 2,000 flats in the Czech Republic and abroad, with a total value of CZK 15 billion. In addition to rental management, the company also specialises in other property services, such as property sales and investment advice, whether for rental properties or development projects.
With first-hand insight, Bohemian Estates property experts monitor current developments in the real estate market. After a few weeks of inactivity, the market has largely returned to normal, with a few exceptions. “The short-term rental segment, particularly in the capital, has probably suffered the most. However, this has created opportunities for long-term rentals, and we are seeing lower demand for property purchases. This may be because there are currently many attractive rental offers on the market. We also assume that people may be reluctant to take out a mortgage at present. We can only speculate whether these are people who worked in tourism, but it is highly likely,” explains Novotný.
In his view, caution is appropriate at this time, particularly for people who were or still are employed in affected sectors and whose workplace is in the capital. “Prague is still far from recovering from the whole situation, and many agencies remain closed or operate only on a limited basis. The same applies to tour guides and, of course, hotel employees; some hotels are planning to reopen only in the autumn, and only provided there is no second wave. It is therefore hardly surprising that these particular people do not now want to embark on something as financially demanding as a mortgage.”
On the other hand, the situation favours investors who had planned to buy a property for rental purposes. As already mentioned, rental flats are currently in demand, and property prices are not expected to fall in the future. “If someone was planning to invest in a rental property, there is certainly no reason to wait. The originally anticipated fall in property prices is highly unlikely to happen; on the contrary, prices will continue to rise at the same pace as before. In addition, buyers now benefit from the long-awaited abolition of property acquisition tax,” adds David Novotný.
But how should you proceed if you want to buy a property for rental purposes? To achieve the highest possible return, it is essential to know exactly what you are buying for your money. “When purchasing an investment property, it is crucial to minimise risks arising from technical and legal defects. For this reason, I recommend involving experts in the purchase, who can help buyers not only with monitoring but also with assessing the property’s condition from every perspective, negotiating discounts and, above all, handling the legal aspects. We also offer subsequent property management and, at the final stage, its sale, enabling us to secure the highest possible return,” concludes Novotný on behalf of Bohemian Estates International.