Czech Republic

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Recent: Sterboholy Gardens

Investment Overview
The Czech Republic offers investors stability and continued growth prospects. Due to the growth of service industries and around the major cities of Prague and Brno, crumbling 'panelaks' and increased wealth, there is a growing demand for central apartments.

There are restrictions on foreign ownership which are relatively simple to overcome. The tax regime is favourable when property is held for two or more years.

At a Glance
Capital         Prague
Population    10.2 Million
GDP/Capita   €5,262
Currency      Koruna (CZK)
Language     Czech

Perfectly Situated
Formerly part of Czechoslovakia, created after the fall of the Austro-Hungarian Empire at the end of World War One, the Czech Republic emerged from the darkness of communism at the beginning of the 1990s.

Now free and thriving, the country is perfectly located at the heart of the New Europe, ideally positioned for access to the well-established economies of Western Europe and the expanding economies of Russia and Ukraine to the east.

Long-Term Growth
Forecasts estimate steady growth in prices at around the 15% plus per-annum range for the next two to three years, possibly falling to the 10 to 15% range by about 2008 with a good ten-year growth period ahead before any significant correction or plateau in prices.

Superb Market Conditions
The following factors:

• EU membership
• Overall strength of the Czech economy
• Lack of high-quality housing supply relative to demand
• Strong growth within the Czech middle class
• Low interest rates
• Ready availability of mortgage financing

are all contributing to the strong demand and growth in the Czech property market, particularly in Prague.

A young and growing middle class is creating greater and greater demand for modern, high-quality, yet affordable housing.

Highly Educated Workforce
Since 1993, over $50 billion in foreign direct investment has flowed into the Czech Republic.

The Czech workforce is a significant factor behind the country’s growth and its increasing share of FDI. They are highly motivated and well-educated; many multinational companies have been able to establish key European strategic bases in the Czech Republic, including DHL, Panasonic, Motorola and Honeywell.

Undersupply
The Czech statistical office estimates that there is a need to finish approximately 50,000 dwellings annually until 2010 to meet current demand.

Estimates show 20,000 dwellings a year will be removed from the housing market (due to their deteriorated condition) and permits for the construction of only 23,700 apartment units were issued from Jan-Nov 2002 (these developments completing during 2006) with growth in new permits of only 6.7 per cent year-on-year.

So the combination of extremely limited supply expected over the next seven years and the above demand factors indicates continuous strong demand pressures exceeding supply levels for the long term.

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