The private equity group Fidurock has set itself the goal of growing its rental apartment portfolio from 250 to 2,000 units by 2026, according to its executive director Ondřej Křivanec. The investment boutique’s portfolio is currently dominated by retail parks, but Křivanec says it’s in the process of finalizing another 150 rental units and already has a further 500 units in the pipeline.
Along with competing for existing stock, he’s looking for development opportunities in the primary cities of Prague, Brno and Olomouc. But the smaller towns of Central Bohemia are also in play, at least those that have decent connections to Prague and drive times of around 30 minutes. “What you need for BTR is a city where you have a younger population available, meaning students, and it’s ideal to have foreigners there,” he says.
Bratislava’s resi market continues to attract Fidurock’s attention as well. “It’s about the cap rate. When we look at what the achievable market prices, at the rent levels per square meter, and the household disposable income, we see some discrepancies which we would like to follow.” This is a technical way of saying that he’s focusing on towns with rental growth potential.
It all means that while two-thirds of Fidurock’s portfolio is made up of retail parks, its residential portion is set for significant growth. Křivanec admits he’s had to adjust the type of real estate they’re targeting to match a rapidly changing target audience. Just two years ago, the company was building flats that it then rented out unfurnished. Křivanec claims he even experimented with putting furnished units on the market, but that they met with little success. Today, Fidurock believes their target customer wants to spend more time enjoying and living in their apartments…not shopping around for furniture and appliances and waiting months for them to be delivered.
“The basic question for the whole real estate and for any product is who is the customer,” he says. “The answer to this for me is that the client we are looking at is up to 35 years of age. They’re young professionals.”
The underlying motivation for renting rather than buying is also in flux. With the average new apartment now listing for around CZK 160,000 sqm, Křivanec says it’s no longer about attracting people who want to rent. It’s about providing an alternative for people who can’t afford to buy.
He says the rush to acquire BTR stock reminds him of New York City in the early 2000’s. “You had a lot of investors coming in, buying up apartment buildings in big numbers. If you want to start in the business there today it’s very difficult, because the cards have been dealt. We see that Prague is in a similar situation now.”
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