Well, we are clear (until the next change). The original government plan, to tax newly sold flats from development project with basic 20 % VAT rate from 1st January next year (or even from 1st October of this year) has eventually (?) softened. There will be a certain “step-by-step“ progress in the form of 14 % VAT next year and 17.5 % VAT from 2013. To what extent will this decision affect further development of new flats construction as well as trading older flats?
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Czech property development, hit and shaken by the impacts of the real estate crisis, is slowly picking up breath again. A number of new projects has already started and apart from residential and office buildings and logistics centres, construction of business units has already started too. Let´s mention for instance the new outlet centre in the Nový Jičín area and further expansion of shopping centres Černý Most and Futurum. And according to various surveys, it is the commercial complexes, on which investors focus their attention now. At the same time the positive future of “retail” property development in the Czech Republic is confirmed by reports about the planned expansion of a number of business chains in Central Europe.
Today the fundamental criterion for choosing office buildings is clearly rent and the quality of incentives. However, tenants are more sensitive to other things too, such as behavior of landlords and architecture of the buildings. In this respect the appearance of reception is especially important – says Eduard Forejt, head of leasing office space department in the consulting firm Jones Lang LaSalle.
On Wednesday, 20th April at 1.30 pm the company AZ Tower will officially launch the construction of the highest building in the Czech Republic – thirty-storey AZ Tower skyscraper. This exceptional building, whose developer is Properity, will be built in the emerging Jižní centrum (South Centre) in Brno. AZ Tower, after its completion in 2013, will not only be the Czech height record holder, but also quite a substantial injection in Brno real estate market, especially thanks to its 9,000 sqm of office space.
Private business in the field of real estate started to exist here after the Velvet revolution and hardly anybody – including politicians – understands what kind of problems property developers deal with and what multiplication impacts it has on the economy. This is how the head of Passerinvest, Radim Passer, sees the relation between property development, society and politics. Passerinvest continues to build BB Centre and they are thinking of other projects, too.
Three large transaction in the Czech real estate market totalling to EUR 537 million, ie. roughly CZK 1.4 billion, were concluded in the first quarter of this year. Compared to last year the result is more than gratifying as the value of real estate investment in the whole of last year amounted to mere 700 million EUR. CB Richard Ellis expects this amount to grow to EUR 1.4 billion this year, which is double the last year´s result.
Colliers International, leading international real estate consultancy company, whose Slovak branch is a member of Bratislava Research Forum (BRF), has focused on 12 markets, referred to as “New Europe region“. Albania, Bulgaria, Croatia, Czech Republic, Greece, Hungary, Poland, Romania, Russia, Serbia, Slovakia and Ukraine were subjected to mapping which resulted in a summary of all commercial real estate sectors in the said countries in 2010 as well as predictions regarding trends projected for 2011.
The quantity, or the space, of superior quality offices in Prague has significantly grown during the past decade. At the same time, the figures showed that the proportion of A-class offices on total demand is usually by 20 – 30 % higher than their share corresponding to total supply of administrative buildings in Prague. The crisis has changed this situation dramatically, however.
Prague office market recorded several “five-year“ negative records during the last year: decline in transaction activity (only 215,000 sqm were leased), highest vacancy rate (13.2 %) and lowest volume of completed new construction (mere 59,100 sqm). The fall of the Czech economy in 2008 and 2009 is visible with a traditional delay. Analysis by King Sturge, however, expects an overall improvement of the situation this year.
“It is and will not be easy. And it is certain that it will never be as easy as before the financial crisis!“ these words by Olga Humlová from Salans opened the Stavební fórum conference Real Estate Market > Winter 2011 – Tax & Legal… Focus. Furthermore, this statement was supported by the course of the conference. Although nobody puts catastrophic visions before the domestic housing market any longer, we cannot count with an explosive growth either.
Livelier demand, fewer loans, lower prices and reduction of property development according to King Sturgetrend
The professional and media debate about the actual state of play on domestic residential market was enriched by the consultancy King Sturge last week. Unlike others, their analysis is an attempt to view the issue comprehensively including placing the housing market in a macro-economic framework containing forecast of the development this year.
It is typical for construction industry that is stands at the top of economic development. Construction of anything is a long-distance run. When economic boom finishes and a crisis or economic downfall starts, constructors continue to build furiously – the trick lies in so-called supply of labour. On the contrary, when the crisis comes to an end and everybody wants to invest and build again, mortar mixers are empty. Before a structure is prepared to “start digging“, several months pass. This is exactly what construction industry is experiencing today (hopefully!) – differently in companies and differently in the region.
According to analysis by Cushman & Wakefield, logistics property market did extremely well in terms of leases last year. Tenants have signed contracts for 845,000 “squares” of modern storage and industrial space – it is close to results in the record-breaking year 2007 (it was 855,000 sqm then). In terms of property development, however, the market has reached the lowest level since 2004 – almost no new construction has occurred since the third quarter of 2009.
We are waiting for the moment when people stop worrying about losing their jobs and a positive perception of the future will outweigh – this is how Kamil Kosman, director of real estate financing and mortgage department at Česká spořitelna, defines the determining parameter of the further development on the Czech real estate market and especially its residential sector.
In 2010 investment transactions worth EUR 666 million were concluded in the Czech real estate market, which is 17 % more than in 2009 when commercial properties worth EUR 556 million were traded. This year should be even better, according to King Sturge. However, the dominant real estate market player – CPI group – will be struggling with foreign competition rather more.