The share of residential transactions was responsible for 22% of the volume of real estate investment in Q2 2024. The tally for the first six months of the year is €158 million, or 18% of the total investment value. Among the deals that make up the figures are MINT Residneitla Fund’s acquisition of Vysočanský mlýn, AFI Europe’s acquisition of Nová Eletkra and the purchase of Rezidence U Šárky, Xplace Hranička/Waltrovka and Xplace Milovice by the Prague Archdiocese. This represents a significant shift for a market in which residential transactions never exceeded 5%.
Lower overall investment volume naturally plays a role in the sudden spike. High interest rates have acted as a significant barrier to deal flow, not just because financing is now so expensive, but because some potential sellers lack confidence in their ability to source new investment product.
But Fraser Watson, Head of Investment at Savills, says a new approach by developers is also a factor. “Due to expensive mortgages, regular buyers have disappeared from the market, and entire blocks are now being sold to institutional investors….Although selling an entire building might result in a small loss of total revenue received from individual apartment sales, this option is easier and more convenient for developers.”
“We expect rental housing to exceed last year’s volume, making 2024 one of the most successful years for this real estate sector,” says Vojtěch Wolf, Senior Investment Analyst at Savills. “Rental housing has significant growth potential, supported by the current conditions in the homeownership market. As a product, rental housing is becoming increasingly popular among investors, and we therefore expect a healthy level of activity in this sector next year as well.”
Currently, Prague has 4,130 modern rental units, meaning those built or renovated by developers and institutional investors specifically for long-term rental purposes. Since 2021, their capacity has increased by 65%. An additional 1,000 units are currently under construction.
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