As a global real estate company, Engel & Völkers proudly serves communities in more than 30 countries. From here in the Americas, through Europe and Asia, and down to Africa, Engel & Völkers advisors serve their communities not only as local market experts but also as global advisors with an understanding of the real estate market on a global scale. In part, this month Engel & Völkers has gathered market highlights to share with you on the capital of the Czech Republic, Prague.
Known as “the golden city of 100 spires”, Prague is a mecca of European culture and design, making for an exciting real estate market. The Historic Centre of Prague was even declared a UNESCO World Heritage Site in 1992 for its impressive Gothic and Baroque structures.
Prague Real Estate Market
While global economic growth was largely stifled due to COVID-19, Prague’s real estate market proved resilient. Policy changes, like the repeal of property transfer taxes and mortgage rates under two percent, offset the pandemic’s effects and Prague saw increased interest in home buying.
Prices grew steadily from 2010 to 2019 with accelerated growth beginning in 2016. Throughout that period, prices increased 51%, outpacing wage growth. Now, buyers need to pay over 11 times the average annual salary to purchase a 750 square foot home, the highest rate in Europe.
The most sought-after districts and neighborhoods in Prague
Dejvice is a trendy residential neighborhood full of hip cafés and international restaurants. The neighborhood’s numerous embassies, universities, and ex-pats give it a distinctly cosmopolitan flair. Further, this unique neighborhood showcases a number of beautiful, historic properties with intriguing architectural designs.
This neighborhood, located on the western bank of the Vltava River, is one of the most popular residential areas in Prague. Its green open spaces and proximity to the city center make it ideal for buyers looking for a balanced lifestyle. Stromovka Park, situated here, adds to the appeal as Prague’s largest park offering spectacular views of the entire city.
Střešovice is another one of the city’s most desirable neighborhoods, known for its green, peaceful, village-like streets. Home to famous residents, including former President Václav Havel, it is often referred to as the “Beverly Hills” of Prague.
Vinohrady is a bourgeois neighborhood with an abundance of greenery and pastel-colored Art Deco houses owned by young, affluent professionals from all over the world. The international pubs and beer garden in Riegrovy Sady Park are particularly popular local gathering spots. The neighborhood is also known for its famous Christmas market held on the leafy “Náměstí Míru”, Czech for “Peace Square”.
The up-and-coming district of Smíchov is the business center of Prague and is characterized by its lively nightlife, gleaming office buildings, and converted factories. The MeetFactory arts center puts on a wide selection of modern exhibition, theatre, and concert offerings.
Karlín has evolved from an industrial district to a trendy hub of Prague’s nightlife, with young people flocking to the area. Art Nouveau buildings and former factories now house elegant restaurants, wine bars, and galleries. The old harbor is lined with contemporary office buildings, while the pathways along the Vltava River are perfect for jogging and cycling.
The average price in the top segment
Sale prices at the top end of the residential market range between $933,916 and $4,085,883 USD. Meanwhile, large properties with historical significance and exceptional residences located in the heart of Prague can sell for as much as $8,171,765.
Trends and developments in the Prague market
Rising home ownership ratio
The last 14 months have prompted a shift in residential needs. Interest in homeownership has increased significantly as people become more reluctant to rent in the long run and banks tempt prospective buyers with the promise of low interest rates. The current record-breaking number of mortgages being taken provides insight into how the pandemic has inspired people to start looking to become homeowners.
Boom in countryside living close to urban life
Traditionally, people in the Czech Republic live and work in the city during the week and take the weekends to escape from urban life at private cottages in the country. The pandemic has created an increased demand for such cottages in the quieter regions surrounding Prague. Additionally, like in all capital cities around the world, buyers are increasingly seeking more space, an extra room for a home office, and a terrace or garden.
Absence of tourists causes rents to fall
Due to a significant decline in tourism, the rental market has experienced an over 20 percent drop in Prague’s center and over 10 percent in the rest of the city. Currently, the number of vacant apartments available for rent exceeds the level of demand.
Slow new construction versus rising demand
Unfortunately, the construction rate of new buildings has slowed while buyer demand for newly built properties has remained high. This has led to steadily rising residential prices in the city, even in these economically challenging times.
“The Prague real estate market is currently very stable overall. We see a steady upward trend in purchase prices for residential and commercial properties, which is continuing. Undoubtedly, this ongoing development is supported by high buyer demand and low-interest mortgage loans…We firmly believe that Prague has the potential to catch up with the rental and purchasing power of other Western European cities such as Munich, Vienna and Zurich.”Andreas von Schlik, License Partner, Engel & Völkers Prague
Engel & Völkers Prague
Located in a beautiful historical building on the west bank of the Vltava River, the Prague office offers unparalleled service quality. Engel & Völkers has been active in the Czech market since 2008, and over the years, the branch has undergone intense dynamic development. Now, Engel & Völkers Prague is uniquely positioned to provide clients with the most thorough and professional care whether purchasing, renting, or selling real estate property.
For further information about the property market in Prague and/or referrals please contact:
Engel & Völkers Prague
Phone: +420 233 091 011