The current hit on the property market is flats in poor, often downright dismal, condition. A savvy investor, or a “micro-developer”, can make tens of percent a year on them. So what does a typical investment in a flat that is anything but move-in ready actually look like?
New-build prices are often astronomical
Buying newly built properties in Prague’s wider centre is currently, for many retail investors, an unaffordable proposition. Just take a look at flats in the popular Prague district of Holešovice – quality projects in attractive locations, such as SO-HO Rezidence or ZigZag Haus, are priced between 180,000 and 250,000 Kč including VAT per square metre. With premium projects such as Linea Pura, there is essentially no upper limit – their offer includes properties priced at 375,000 Kč per metre.
Prague 7 is buzzing, whether it’s Holešovice or Letná – and new-build prices reflect that
Literally around the corner, however, you can often find flats in older tenement blocks at prices that investors may well find attractive. There is just one catch – they need to be sensitively renovated at a reasonable cost and brought up to the standard a future tenant (or possibly buyer) expects in 2025. Anyone with enough experience and a contact list of skilled tradesmen has quite possibly won the current Prague property lottery.
The main thing is knowing how to go about it
So the number of individuals and small firms focusing on micro-development keeps growing. Buying several flats in the same building naturally brings noticeable economies of scale: the owner saves on the renovation work and at the same time gains a stronger negotiating position towards the other residents of the building. And turning a flat that no one has touched for several decades into one that is not only habitable but even visually and technologically attractive, is not such a costly affair after all. A renovation of a typical 2+kk flat of the usual scope, including new utility lines, plaster, floors, a bathroom and interior doors with frames, can still be kept within one to one and a half million korunas. Simple arithmetic often shows that the financial cushion created by the difference between the price of a new build and an older flat is many times larger.
Obtaining the necessary permits and finding reliable tradesmen is a tricky discipline – but those who master it gain a real head start in today’s property market
Forget demolition, it’s time to renovate
The boldest risk-takers go as far as buying and renovating properties whose condition can only be described as derelict. These may be unoccupied family houses on the outskirts of Prague, acquired cheaply through buyouts of inherited estates or at an enforcement auction. Such properties can – once you have fought your way through the related legislative jungle – be converted into several separate residential units, with a substantial profit from the transaction. That applies both if you plan to offer the flats for long-term rental and if you sell some of them into personal ownership. Would you like to know how to invest your spare funds in property to the best advantage, rent it out without any worries, or offer it on the market in an attractive way at an appropriate price? Then we are here for you. Our company FLAT SERVICE has decades of experience in the professional management of investment properties, and our partner estate agency MaMaison will guide you through the process of buying or selling a flat from A to Z. Just get in touch on +420 277 000 330 or at sales@flatservice.cz and we will be happy to tell you more.
