Year 2020 is extraordinary. What we considered to be certain in January is completely different today. It’s so fast that we’re not able yet to be fully aware of some of the changes. Real estate has been affected by changes too. And this is what I will write about in today’s article.
The centre, Prague 1, was a tourist open-air museum with a few long-term residents who didn´t want to give up. Today, without tourists, only the few residents are left. It wouldn´t be difficult to change the character of Prague 1 quickly into a fully inhabited location, as it is the case in other parts of the city. However, there is a high degree of distrust of what this central neighbourhood will look like after the restrictions end, so no one wants to move to the centre of Prague, whether to rent or buy an apartment for permanent residence.
Most people expect that everything will get back to normal, and, therefore, that the long-term tenant will receive a notice of rental termination because they´ll pay less than the tourist, or that the quiet apartment building where I bought my nice little apartment will turn into a hotel and after a few conflicts, I´ll also have to move out eventually. Those interested in buying for a short-term lease have also logically evaporated. Demand for purchase and renting is weak. There is probably a situation where it might be possible to buy property in the centre for better prices and it will last until tourists come back or until short-term rental in apartment buildings is disabled. You can find a cheap rental in the centre already now.
A large completely renovated apartment on the 4th floor of an apartment building with an elevator and overlooking a park is of a high value and the demand for such an apartment will also be high. High-income people want to buy first-class real estate and are willing to pay for it, whatever the market situation. Similar properties won´t be affected by a possible crisis.
On the other hand, a large apartment on the 1st floor of an apartment building facing a busy road, though in the same neighbourhood as the first case, will be difficult to sell these days. It will probably take a long time and it will probably be at a lower price than the seller would expect. Demand today is primarily for first-class quality, if the property has any flaws, most often it is traffic, a low floor or the building in poor condition, then the demand is weak and those interested push the price down. This was also true in the past but to a much lesser extent as the demand for real estate was strong and, therefore, apartments sold well even with a flaw.
The combination of frequent use of home office, restrictions on leisure time activities and high real estate prices in Prague – this is a mix of reasons that leads families in particular to move out of the city. Land and family houses around Prague became very lucrative in these six months and their prices skyrocketed. For Prague dwellers, housing outside Prague has been and will be relatively cheap for some time because they are used to a higher price level. It is quite probable that this trend of moving out of the city will continue for some time as the use of home office will be of a more permanent character.