Written by Dominic Swire
Property in Prague is a subject often covered in the financial pages of foreign press, but as the Czech economy matures, bargains are becoming more elusive – but they still exist. Expats.cz offers a brief overview of what to bear in mind for those considering a move to the Golden City.
Perhaps the fist question to ask is whether to rent or buy. If you´re new to the city, renting might be the safest option. This can give you the time to get a feel of the place and do your own research of the market.
Despite often being catagorised as eastern Europe (although many Czechs will point out that Vienna is further east than Prague), rental prices are not as cheap as one may expect. This is down to several factors. Firstly, the strength of the Czech koruna has been steadily rising over the last few years. Secondly, flats for foreigners are often significantly more expensive than those for locals. Thirdly, many apartments in the Czech Republic are still under governmental rent control, which has the effect of pushing up the prices of non rent controlled apartments. This system should eventually be phased out but it will take years.
Nevertheless, bargains are possible – it just means you may have to look a little harder to find them. Without wanting to blow our own trumpet, one of the best places to look is the Accommodation section of Expats (see the link on the left of the page).
If you want to rent a whole apartment, expect to pay in the region of CZK 9,000 – 30,000 / month. But don´t be seduced by a cheap price: if the flat is through an agent, they will want a fee (usually a month´s rent), plus a deposit of one or two months; and many cheap places are unfurnished which can mean spending another month´s rent at Ikea (a free bus from Zlicin metro stop takes you there).
A cheaper alternative is to flat share. This is popular in Prague and again, Expats is an excellent place to start the search. Shared rents range from around CZK 5,000 – 9,000 / month. Most ads here are placed by English-speaking foreigners.
If you want to go even cheaper, you need to look where the Czechs look. Check out http://www.spolubydlici.cz/cz/index.php This site has pages in English, however the real bargains are on the Czech pages, so get a native speaker to help you; and expect to be sharing with other Czechs that may or may not speak English.
Another useful Czech site is www.annonce.cz. This has a corresponding magazine that can be picked up around Prague – although it´s not for the feint hearted as they often include a classified section on hookers.
If you do look for apartments in the Czech media, here are some useful terms to be aware of:
Samostatný: own room
průchozího pokoje: through room
nezařízený: not furnished
Společný: shared room
vcetne poplatku: bills included
+ poplatky: + bills
If you need to translate more words, go here for an online dictionary: http://slovnik.seznam.cz/sl.fcgi
Apartment hunting can be time consuming. One way to get around this is to go through an agency and let them look for you, but you´ll pay for the privilege – usually about one month´s rent. If you do this, make sure you get your money´s worth by insisting on a lease contract in your own language; a proof of ownership document (stating who legally owns the house); and a hand over protocol (a list of contents and their condition – this can safeguard your deposit at the end of the contract).
As the law now stands, if you are not a Czech national you can only own property if you have a long-term resident visa (five years or more), or if it´s purchased through a limited company (s.r.o.). Many people set up or buy companies specifically for this purpose. An “off-the-shelf” company can be bought for around CZK 30 – 40,000. If you need to arrange a mortgage, paying for a broker can be worth the money due to the amount of different offers available at banks, and especially if you don´t speak the language.
There is also the issue of currency risk. If the Czech koruna falls, so too does the value of your investment. To negate this problem, it´s possible to arrange a forwarding contract with a Czech company dealing in currency risk. They will set a concrete exchange rate that you can both work with. However, if the koruna rises as it has been doing over recent years, you can be shielding yourself from further gains. It´s your call.
As any estate agent will tell you, the three most important things to consider when buying property are location, location and location. Bearing this in mind, we mention a few places foreign investors ought to be aware of:
Old Town, Prague 1. Popular with tourists and rich foreigners. Prices are already sky high so potential for further increase is debatable.
Vinohrady, Prague 2. Traditionally popular with expats due to Parisian-style streets and fashionable nightlife; although potential for economic growth may be limited.
Vysehrad, Prague 2. Not as cosmopolitan or fashionable as Vinohrady but has many comparable apartments.
Zizkov, Prague 3. Great bars and nightlife. Often criticised as one of the less salubrious parts of the city – but Prague is a relatively safe place, so this is not as bad as it sounds.
Andel, Prague 5. Home to a well-established shopping centre and countless new building developments, including a host of new offices. Anywhere within easy access of here is going to be worth looking at.
Dejvice, Prague 6. Popular with expats and has good transport but not as pretty as other areas of the city.
Holesovice, Prague 7. Very up and coming with many new shops and bars opening. Definitely somewhere with potential.
Karlin, Prague 8. Has recently become a fashionable area of the city. Close to the centre with good transport. But keep an eye on the insurance documents – this place was devastated in the 2002 floods and many homeowners lost out because they didn´t realise ‘water damage´ does not imply ‘flood damage´.
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