Jakub Kořínek is a co-founder and partner of Fond Českého Bydlení
Western real estate developers continue to hesitate with investments in Central Europe, but Czech investors of all sizes continue to put money into Czech real estate funds. How are your inflows this year and have they changed over the last couple of years?
I would say there has always been a big affinity of Czech people towards real estate and a kind of revival of the economy and this brought a kind of good mood on the market. Back in 2022 or 2023, you would read articles about the real estate bubble bursting. People were afraid at that time and were avoiding real estate. Now they see that no disaster took place and they’ve decided to invest in something they understand.
So you noticed a decline in inflows during that time?
In those years, our fund was on a growth curve, but we weren’t representative of the market trends, the way some of the other bigger funds with a longer history of fundrasing were. They saw quite a significant decrease in fundraising. We experienced growth stagnation, but not actual decline. That changed to quite significant growth by the end of 2023, so 2024 was an excellent year for fundraising. We doubled our fund last year and this year (2025) is developing even better. We should double the fund once again this year. We’re not there yet but we’re on a good path.
How much did you collect last year in total?
About CZK 500 million. This year we should be around CZK 1 billion in new fundraising,
Your fund was relatively young when Covid hit, which makes it the first time you had to deal with challenging times. Interest rates were low, and investors were easier to find.
Until around 2020, it was actually very easy to invest in rental apartments then because the mathematics were simple. There was a market equilibrium. Rental yields were basically stable, not just in Prague but in the district cities. In a smaller city, you could buy a rental building with a yield of 7% and a 3% loan from a bank. That means you’d make money both on the rent and on the difference between the yield and the cost of capital.
Then in 2020, prices in regional cities started growing even faster than in Prague. At first, the interest rates didn’t go up, but then they started growing quickly. Suddenly in 2021, instead of buying apartment buildings with a 7% rental yield, you’d be lucky to find deals for 4%. But the bank would lend you for 7%. That killed the market for a while, because there’s no point buying a rental apartment building in a small city at a 4% yield. At the same time, you couldn’t finance it with bank money.
Speaking of which, your LTV is rather low right now, below 20%.
Leverage has never been our focus. We were always very careful with leverage, using it on reasonable scale. When interest rates went up, we just paid off all the loans that were on a floating interest rate. We only kept only the ones that had fixed interest rates at good levels. But there were two or three years when the market was almost dead. During those years we had to redo our business model. Instead of just making our money on rents and the low cost of capital, we needed to become a company that works actively on buildings. That could be to increase the rental space, upgrade the quality of the housing or to optimize the size of the apartments.
We’ve kept this mindset. Whenever we invest in a building, we need to have a strategy how to increase its value. We don’t just buy and lease it, but somehow to improve it. Anyone who’s serious about investing into rental apartments knows it’s not just a passive source of income.
My guess is that a lot of investors in SICAV funds start off by buying apartments on their own, and only then learn about all the risks. It’s also just a lot of work. Why not leave that to someone else?
That’s exactly the logic. Most of our investors have some investment apartments in their portfolio already, either as a plain vanilla investment, or something their children can inherit someday. Today, all of them know what it’s like to have a tenant call you on Christmas Eve because, say, the toilet is leaking. As a fund, we take over all of those problems. But we also make it possible to diversify your risk, simply because the fund has so many tenants. It’s not like renting a big building to a single tenant.
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