Covid revived the market for long-term apartment rentals in Prague, probably only temporarily
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In connection with increasingly unavailable flats for sale, it has been talked for several years in Prague that the market for rental flats will follow the trend in Western Europe and the number of flats offered for rent will increase.
While rents make up 84 percent of the market in Berlin and 78 percent in Vienna, in Prague the share of rental housing is only 32 percent.
The strengthening of the rental market eventually brought about the covid-19 pandemic. According to experts, this is rather a short-term trend.
As soon as tourists and their interest in short-term rentals return, the number of flats for long-term rent will decrease again. And lower rental prices are likely to return to normal today.
Tourist and students are missing
According to data from developer Trigema and the Flat Zone server, the number of apartments for long-term rent on the Prague market rose to 15,400 at the end of the first quarter. This is the highest in the last five years.
Rental apartments in Prague
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“While the offer of flats for long-term rent is still growing, the opposite is true of short-term rentals. This continues the trend started more than a year ago by the coronavirus pandemic. At that time, some landlords decided to convert their flats from short-term to long-term rental housing, because they lost more foreign clients, “says Trigema spokesman Radek Polák.
His words are also confirmed by Michal Pich from the real estate server RealityČechy.cz. “The main reason for helping the supply offer is de facto zero demand for short-term rentals,” he says.
The significant price, which is specific to the Czech Republic in the Czech Republic, is also evident.
According to Bezrealitky, the average Prague rent can now be purchased for 261 crowns per square meter per month. “In the case of a model 75-meter apartment, the tenant will save about two thousand crowns a month compared to the situation before the start of the coronavirus crisis,” says the head of Bezrealitky Hendrik Meyer.
Historically, the highest rental prices were in the capital at the turn of 2019 and 2020, when they were just under 300 crowns a month per square meter per. Over the last year, rental prices in Prague have fallen to the level of 2017, and the decline in prices has been reflected in all categories of flats.
In addition to the loss of tourists, other factors also contributed to the increase in rental apartments on offer.
“Last year, foreign workers and students could not study from home from the Czech Republic. However, a larger number of flats in new buildings have also entered the market, which investors are buying on cheap mortgages for the purpose of further lease, “Jiří Knechtl summarizes from the Reality.iDNES.cz portal.
According to him, although there has been a significant increase in long-term rental apartments, the supply is slowly beginning to decline. And as the situation around the pandemic and the possible return of tourists develops, the Prague rental market will move back to normal.
“Assuming that no further significant constraints return and the European economy operates as before, no price drop or supply increase can be expected. Rental prices in economically or touristically interesting areas will start to rise as the mobility of residents and tourists increases, ”explains Knechtl.
Investors believe in rents
“As soon as tourists start to return to the city, the owners will want to vacate the apartments again for short-term rentals. Of course, they are contractually bound, usually by an annual contract. However, most of these rents will end before the summer season. If the owners revive the purpose, that tourism is slowing down, they will not have the will to prolong long-term jobs and prefer to offer apartments again for the original supplies, “adds Tereza Vrzáková from RE / MAX Reality.
However, it is true that small investors are interested in apartments suitable for rent. They buy up to a third of new flats in the metropolis and then offer them for rent. Investment funds focused on rental housing are also gaining in importance.
“We are recording the increased interest of domestic and foreign institutional investors who are considering entering the Prague rental market. Investors believe that in the long run, housing trends will approach Western markets, where the share of rental housing is significantly higher, “reads the analysis of the Prague residential market of the real estate company Lexxus.