BTR Consulting, a company that provides consultancy in the field of investment properties and development projects, has published exceptionally interesting data, which we will take a closer look at in this instalment of the FLAT SERVICE Advisor.
Straight to rent
Before we do, it should be stressed that these data concern exclusively flats built under the model known as “Build to Rent” – hence the commonly used abbreviation BTR. What does that mean in practice? In the past, developers built apartment buildings in which the individual flats were intended purely for sale and it was assumed that the majority of the new owners would also live in them. The number of flats that went straight back on the market in the “For rent” category was relatively small.
The keys usually don’t even have time to warm up in the hands of a new BTR property owner
Under the Build to Rent model, however, it is assumed from the very start that the flats are bought by investors. These are often not individuals (natural persons) but so-called institutional investors. In other words, various companies, funds, banks or financial groups. The properties are therefore 100% intended for rent. It may even happen that the flats are kept straight in the portfolio of the developer company behind the particular project.
Thousands more flats
Prague currently has a record of more than 12,000 flats built or planned under the BTR model. In the past year alone, the number completed and offered on the rental market was around 800. This year is expected to bring moderate growth and 2026, with roughly 1,500 new BTR flats, could be a record year.
Middle Eastern capital is increasingly flowing into Czech flats too
By far the biggest player in institutional investment in residential property at present is AFI Home, a member of the multinational group Africa Israel Investments headquartered in Yehud, Israel. AFI Group is active in the Czech Republic not only in rental housing but also in the office and commercial property sector; in the past it built, for example, the Palác Flora and Palác Pardubice shopping centres.
Excellent occupancy
For potential investors in BTR, however, the most important figure is the one showing the percentage of properties still unoccupied. In the first half of 2024 it was still 15%, but in the second half of last year the vacancy rate fell to a mere 6%. A drop of nine percentage points may not sound as striking as when we point out that a simple calculation shows the number of vacant flats is a full 60% lower!
Fully furnished properties are often offered under the BTR model as well
This figure is already close to the level of “natural vacancy”. You can think of it in much the same way as the so-called natural rate of unemployment, which stands at around 4%. Even in a fully functioning economy it is simply common for some people to be at a stage of life where they are moving between jobs, taking a few months off from their career, or, for instance, prevented by health problems from looking for work straight away. Achieving 0% unemployment is practically impossible, at least in a democratic society. The only exceptions are perhaps oriental dictatorships, which fortunately (at least for now) we don’t have to worry about. In the same way, with vacant investment flats there can be a whole range of reasons why they remain without tenants. In some cases, owners are still buying additional furnishings, others are being kept by investors for their own use. Or perhaps, despite plenty of interest, they have not yet found the ideal tenant who would fully match their requirements and expectations. Do you have a vacant investment flat and would you like to be guided through the whole process of bringing it to the market? We will be happy to offer you professional property management services that will take all the worries off your hands. Call +420 277 000 330 or write to sales@flatservice.cz and we will get back to you right away.
