With stag parties suffering from Covid, Prague attracts local shoppers
Erik Webb Dempsey, 53, from Atlanta, Georgia, moved to Prague nearly 30 years ago and still hasn’t gotten tired of the Czech capital. “It’s quite simply the most beautiful city I know. The view of Prague Castle from Charles Bridge is breathtaking day and night.
Beyond its architectural charms, “the standard of living is very high,” he says, citing the city’s long history of low unemployment and excellent public transportation; “you don’t need a car”. Dempsey, CFO of The Julius Hotel, owns a 125 m² four-bedroom apartment in Liben in Prague 8, 5 km from the city center. Similar apartments in the area sell for between €600,000 and €875,000.
Since the start of the pandemic, residential life in downtown Prague has also taken on a new appeal. The city’s notorious stag party scene has been a victim of Covid. A Prague-based boys’ tour agency called Pissup Tours reports an 80% drop in UK customers, its main customer base, since March 2020.
The Airbnb marketplace is in hibernation. Of Prague’s 650,000 apartments, 14,077 were available for short-term rental on Airbnb in July 2019, according to data from Inside Airbnb. In mid-July 2021, there were just 7,000 – and only 10% had been let in the previous three months (compared to 60% during the same period in 2019).
The same period signaled changes in Prague’s cultural and culinary scenes. Foster + Partners and David Chipperfield are among 20 architects vying to design a new CZK 6.1 billion (€251 million) concert hall in the regenerating district of Holesovice, just across the Vltava river from the center of Prague 1.
And new restaurant openings are bringing more global choice to the city, according to another American expat, Luke Bodenschatz, 40, who works in hotel management. “We also take our beer very seriously here and there’s a thriving new brewery scene,” he says.
The result? Rather than being overrun with tourists (2019 saw an all-time high of 8 million visitors, which fell to 1.4 million in 2021, according to Prague City Tourism), “the city has been cleaned up and there is more l It feels like it belongs to the people who live there,” says Prokop Svoboda, managing partner of real estate agency Svoboda & Williams. The change is sparking a new appetite for city center living.
Many potential buyers want to try living in the center while it’s still relatively quiet, he says: “Prague 1 has always been more popular among expats, but the pandemic has changed that.” For local workers, affordability has been a problem. According to the analysis of the promoter Central Group, in Prague, a new apartment of 70 m² on average costs 15.9 times the average salary. “People don’t like the fact that they can’t afford to buy property,” says Svoboda.
For renters, however, the pandemic has opened a brief window of affordability. During the lockdown, many Airbnb owners put their apartments on the long-term rental market instead, leading to excess inventory.
“In 2020, you could rent small apartments near the historic Old Town Square for around 13,000 CZK (€535) per month, which is what you would pay for an apartment on the outskirts of Prague and half the usual price from the old town,” says Denisa Visnovska, partner at real estate agency Lexxus. Singles and couples benefited from advantageous rates.
Demand was tempered, however, by the fears of would-be tenants that a return of the tourist market would encourage landlords to terminate emphyteutic leases in favor of more profitable vacation rentals. And now rental prices are returning to pre-pandemic levels, Visnovska says.
Demand again outstrips supply, with 25% fewer apartments for sale in the first half of 2021 compared to the previous year, according to a market report from Svoboda & Williams. The housing stock for sale has also decreased in traditionally sought-after locations such as Dejvice, Bubenec and Karlin.
“People aren’t selling,” says Svoboda, whose agency reports a prime resale price increase of 10.7% in the first half of 2021 year-over-year, and 8.7% for new first-rate constructions during this period. Based on sales prices, the average price of apartments in Prague increased by 3.9% between the third and fourth quarters of 2021 to CZK 110,000 (€4,530) per m², according to Deloitte.
“Relatively few people can afford to own their own home in Prague, which adds to the growing willingness to rent,” says Svoboda. His agency says that for the first time, the majority of first market customers over CZK 55,000 per month are locals.
These include “high-ranking managers” looking for three- or four-bedroom apartments for 70,000 to 100,000 CZK per month, says Jan Kolar, principal broker at Czech Republic Sotheby’s International Realty.
Along with the price of beer, housing affordability is always a hot topic in Prague. And as long as tourist numbers remain moderate, the appeal of downtown living will remain high, Svoboda says. “We think this breathing space will last a little longer. This makes the center of Prague more attractive and drives up property prices.
In December 2021, the unemployment rate was 1.3% in the district of Prague East and 1.7% in that of Prague West, according to the Czech Labor Office.
Since the acquisition tax was abolished in 2020, the only purchase costs are legal fees and, if an agent is hired to find a property, the agent’s fee (usually 2.5-5% ).
Building levels in Prague are at their lowest in five years. The approval process is slow, for example taking three years for the conversion of a house into apartments.
What you can buy for . . .
14.9m CZK (€613,660) A one bedroom penthouse with a small terrace in the old town (for sale with Lexxus/Savills).
CZK 65 million (€2.67 million) A three-bedroom penthouse in the Art Deco Palace of Dlouha (Sotheby’s International Realty).
CZK 80 million (€3.29 million) A two-bed duplex on Parizska Street (Svoboda & Williams).