Commercial Specialist responsible for the sector:
Hana Obrusnikova, Hana.Obrusnikova@trade.gov
Reports available to US companies upon request:
Construction market in the Czech Republic (2008)
The property market in 2008 started with the most ambitious plans ever and ended with the biggest decline with the anticipation of a further decrease. A lack of available financing has had the biggest impact on the purchasers of commercial buildings. Real estate investment decreased by almost two thirds, from $3.1 billion in 2007 to 1.6 billion in 2008.
Demand for new flats and houses will continue, mainly in Prague, but at lower levels. It will likely increase among foreigners who will be able to legally buy residential property in the Czech Republic as of May 2009. Part of the reason that the demand will remain reasonably strong is due to the low quality of a large segment of the available residential property. Roughly 30% of all flats in the country are in poorly-built with aging panel apartment blocks.
In addition, at a time of financial crisis many see buying a new flat as the safest investment. One area where the crisis will significantly hamper the housing market will be the financing of development projects through credit loans, since banks are making loans much harder to obtain.
The sector will be driven largely by intense continuation of work on the transport infrastructure and environmental remediation of brown-field industrial sites. Financing of these projects come from two sources, the state budget and EU funding.