Properties worth CZK 158 billion sold in the Czech Republic last year
Properties worth CZK 158 billion were sold on the Czech real estate market in 2008. According to a survey conducted by the domestic firm MindBridge Consulting, commissioned by the Czech branch of the real estate franchise chain RE/MAX, this represents a total of 93,000 transactions with the average value of CZK 1.7 million.
“Right after our entry to the Czech real estate market, we found out that there is no objective research here and the market is mostly guided by rumours and estimates,” David Krajný, head of RE/MAX in the Czech Republic, said at yesterday’s presentation of the mentioned survey. Coincidentally, at a discussion meeting of Stavební fórum focusing on the issue of real estate trading in the Czech Republic, which had taken place a day earlier, the participants concluded the same thing. For the first time, RE/MAX and MindBridge filled a significant gap in the information base of the sector which had lasted for almost twenty years.
The survey was based on data from the statistical office, land registers, the Commercial Register, real estate agencies and a poll taken among the population,” Krajný described the project. According to him, the methodology was highly complicated because in the Czech Republic there is so far no nationwide database or register of real estate transactions. As Krajný indicated, due to the great difficulties in obtaining the relevant data and information, many renowned marketing agencies did not even participate in the tender for this contract.
Crisis outlook
The structure of the domestic real estate market,
which last year amounted to CZK 158 billion, is largely dominated by
residential transactions, with a share of 67% in the trading. Plus the 6% share
of recreational buildings. A surprisingly small portion (12%) was taken by
commercial properties (administration buildings, retail facilities etc.) and an
even smaller portion by property development projects (3%). “However, the
price movements of property development operations receive a huge media coverage
and therefore become a barometer for the whole market,” Krajný concluded.
On the other hand, the survey did not bring anything surprising in the territorial distribution of real estate transactions. In terms of content, the highest share is easily given to Central Bohemia (22%), followed by Prague (14%) and South Moravia (11%). This ranking is closed by Vysočina, Karlovy Vary and Liberec regions.
We should also mention the results of an opinion poll that involved about 1,000 respondents. 11% of the respondents bought or sold a real estate in the last three years and according to the comments by the study authors, the frequency of real estate transactions in the population does not depend on incomes as much as it depends on education and social status – 91% of those involved in transactions received university or secondary education.
The survey expects that this year the market volume
will decline by 20%, i.e. from CZK 158 billion to only 126 billion. The survey
expects that this year the market volume will decline by 20%, i.e. from CZK
158 billion to only 126 billion. Last year the potential of margins (used only
at 50% because many transactions are performed directly, without involvement of
real estate agencies) amounted to CZK 6.3 billion. A traditional feature of
the real estate sector in the Czech Republic is its fragmentation; 20 biggest
real estate agencies constitute only 20% of all trades and obviously there are
many small brokers operating on the market.
Red-and-blue balloon ambitions
The mentioned survey is part of a large marketing offensive by RE/MAX. In addition to regular advertising campaigns, the US-based franchise obviously plans to establish itself on the domestic real estate market more visibly and solidly than its competitors. For some time the company has been engaged in the education of real estate brokers, where RE/MAX opened its Academy to the public a short time ago. In cooperation with the Czech Society for Quality, it strives for certification of real estate brokers, whose poor qualifications are one of the reasons why real estate offices have a bad reputation among the Czech public and why their services are not used to a larger degree.
The survey by MindBridge, focused on this issue, showed that only 54% of all real estate transactions are performed using real estate agencies in the Czech Republic. The potential customers are discouraged from using the services of real estate agencies by their low awareness of agency brands, unfair behaviour, unreliable employees and poor services. On the other hand, the survey shows that the prices of real estate agency services – according to David Krajný the transaction price ranges, as a standard, between 3 and 5% of the price of the real estate concerned in the Czech Republic – are not a prohibitive factor for the demand (only 3% of the respondents explained their lack of interest in real estate agencies by the high prices of their services).
RE/MAX therefore attempts to establish a personnel
certification system, just like other entities on the market. It already offers
three different certificates – for assistants, real estate brokers and a
broker’s certificate under ISO standards – the latter should particularly
serve as an objective guarantee of quality. In this regard RE/MAX follows up on
the efforts of domestic professional associations and other real estate
franchises and networks. The problem of such initiatives is, however, their
application to a limited group of people (defined for example by their
membership in a professional organization or by employment), and consequently
their poorer prestige and renown. It was not therefore surprising that at the
mentioned meeting of Stavební fórum we listened to words on the need to give a
universal, or nationwide umbrella to the certification processes. The ensuing
discussion showed, however, that given the different interests of all market
stakeholders, this is virtually impossible. RE/MAX’s certification initiative
is the first sign of hope in this field. Jaroslav Novotný, President of the
Association of Real Estate Agencies of the Czech Republic, participated in it as
a consultant, and that is not the end of cooperation between the biggest
professional association of real estate brokers and the biggest domestic
franchise. “In this field we’re very interested in coopering with the
Association of Real Estate Agencies,” says Hanuš Němeček, who replaced V.
Krátký as Executive Director of RE/MAX in the Czech Republic a short
time ago.
Charts: RE/MAX
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