House Hunting in … the Czech Republic

This three-bedroom, two-bathroom apartment is on the fourth floor of an Art Nouveau-style building on Masarykovo Embankment, an upscale street bordering the Vltava River in central Prague, Czech Republic. The seven-story building, constructed in 1908, overlooks Slavonic Island, home to Zofin Palace, a neo-Renaissance building that currently serves as a cultural center.

The building is part of a row of ornate buildings constructed around the turn of the 20th century along the waterfront. The lobby has a decorative vaulted ceiling with a crystal chandelier and mosaic details, and the fourth-floor hallway leading to the apartment is adorned with stained-glass windows.

The 1,636-square-foot, triangular apartment was redesigned in 2014 by the local firm Oooox. The renovation combined two apartments that were “in very bad shape,” said Magdalena Svatkova, senior property consultant for Svoboda & Williams, the Prague affiliate of Christie’s International Real Estate, which has the listing.

The design mixes modern elements with the existing traditional styles. A long foyer with a mosaic-tile floor leads to the living room, with high ceilings, tall casement windows, a gas fireplace and a balcony with views of Zofin Palace. The walls, doors, cabinets and pine floors are painted white. Some of the furniture may be included in the price, “upon agreement with the owner,” Ms. Svatkova said.

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CreditSvoboda & Williams/Christie’s International Real Estate

The living room, dining area and kitchen are connected in the open floor plan, with strings of black can lights hanging over the dining area. The kitchen has a cement island with a built-in range, stained-wood cabinets and Miele appliances.

Sliding doors with frosted glass off the living room lead to a narrow study with built-in bookshelves, which can also be used as a bedroom. The main bedroom is reached through the study and includes an en suite bathroom, built-in dark wood cabinets and a free-standing bathtub in a bay window overlooking the river. The second bedroom, with a balcony overlooking a central courtyard, is on the other end of the apartment, along with a dressing room and a bathroom, all accessible from the entrance hallway.

The apartment comes with storage space in the building’s basement. There is no parking space, but residents can rent a space from the city, Ms. Svatkova said.

Masarykovo Embankment is in the historic Prague 1 district, much of which is a UNESCO World Heritage Site. Many of the city’s most popular tourist sites are within a short walk of the apartment, including Old Town Square, the Jewish Quarter and the National Theater. The Vysehrad castle, which dates to the 10th century, is about a mile south, along the Vltava River. There is a tram stop nearby, and Vaclav Havel Airport is a 20-minute drive away.

Prague, a city of about 1.3 million residents, is the capital and economic engine of the Czech Republic. In the first quarter of 2019, home prices across the country were up 9.4 percent compared with a year earlier, according to the housing price index tracked by Eurostat, the statistical office of the European Union. A long permit process and rising construction costs have led to “the limited availability of housing and the rapid rise in housing costs,” according to a recent report from Svoboda & Williams.

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CreditSvoboda & Williams/Christie’s International Real Estate

“The process of obtaining a building permit itself often takes more than 10 years,” said Michaela Tomaskova, executive director of Central Group, an apartment developer. “Developers struggle to put new apartments on the market and the supply is not sufficient to meet the demand.”

In central Prague, apartment prices have soared from 55,555 Czech korunas a square meter (about $220 a square foot) in 2015 to 102,058 korunas a square meter (about $407 a square foot), an 84 percent increase, according to a report from the property firms Trigema, Skanska Reality and Central Group. (The Czech Republic has been a member of the European Union since 2004, but uses its own currency, the koruna, rather than the euro.)

The rising prices have caused sales volume to slow in recent months, said Blanka Vackova, head of research for the Prague office of JLL, the property consultancy. “The market is not as hot as it used to be,” she said.

But demand remains high, especially for less-expensive, one-bedroom apartments, which accounted for 37 percent of sales in Prague in 2018, Ms. Vackova said. About 30 percent of buyers are investors, looking to capitalize on the growing number of renters who can’t afford to buy, she said.

Masarykovo Embankment, where demand remains high, is one of Prague’s most expensive areas, prized for its river views, central location and historic sites, agents said. Apartment prices in Prague are “often determined by the accessibility to the center and the distance from the public transportation, which is widely used by Prague’s residents,” said Pavel Hassman, owner of Re/Max 4 You, a local agency.

Foreign buyers account for about 10 percent of sales of previously owned homes and anywhere from 20 to 40 percent of new home sales, agents said. The largest groups of international buyers are from Russia, Ukraine, China, Italy and Israel, with a growing number from Vietnam, said Andrea Danhelova, chief operating officer of Fincentrum Reality, a local real estate agency.

Foreign buyers typically make up about 20 percent of sales for Central Group, an apartment developer. “Over the past few years, we’ve noticed a slight increase in the number of buyers from Western Europe, while the Eastern Europeans buy a bit less,” Ms. Tomaskova said.

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CreditSvoboda & Williams/Christie’s International Real Estate
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CreditSvoboda & Williams/Christie’s International Real Estate

In the first half of 2019, 74 percent of Svoboda & Williams’s clients were Czech, Ms. Svatkova said. Of the firm’s foreign buyers, 59 percent came from European Union countries.

There are no restrictions on foreigners owning property in Prague.

While the process is relatively simple, it is typically conducted in Czech. Foreign buyers should hire a Czech-speaking representative “who is knowledgeable with the laws,” Ms. Danhelova said.

Mortgages are widely available, but in recent years the Czech central bank has imposed restrictions on lending to curb inflation, including an 80 percent cap on the loan-to-value ratio of most loans.

Czech; koruna (1 koruna = $0.04)

Buyers pay a tax of 4 percent of the purchase price. The standard commission to agents is between 3 and 5 percent.

The annual property tax on this apartment is about 2,000 korunas ($86), and the building fee for water, garbage and maintenance is about 3,000 korunas ($130) a month, Ms. Svatkova said.

Magdalena Svatkova, Svoboda & Williams/Christie’s International, (011-420) 257 328 281.

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Published at Wed, 21 Aug 2019 16:29:43 +0000