Shift in Czech luxury residential market - Ceres

Rising demand and a lack of supply are creating a wealth of investment opportunities in the high-end residential market in Prague and the Czech regional markets, according to Prague-based Ceres Group, a global provider of services for international investors in the luxury residential market. Ceres held a press briefing on Tuesday on the prospects for this segment of the market. In 2007, the average price of luxury residential space increased from CZK 100,000 per m² (EUR 4,030) to the current price of CZK 250,000 per m² (EUR 10,076). Nonetheless, prices remain low by Western European standards.

According to Ceres, the market is undergoing a shift from buy-to-lease (B2L) investors to prime investors less interested in yields than capital growth. Active in providing services to B2L investors, Ceres anticipates it will take another 12 to 24 months for rising prices and less attractive yields to drive this group of investors to regional cities such as Most, Brno and Ostrava as well as to emerging Eastern European markets.

Prospects for prime investors on the market are considered strong for the next five years, with annual price growth estimated at 20-30%. The majority of luxury residential investors in Prague come from the UK and Ireland, approximately 70%, while the rest come from the US and Russia, with a growing number of local investors getting involved in the sector. Approximately 10% of Ceres’ client base are Czech investors.