Real Estate Investment Project in Prague (the Czech Republic)

The Presentation was prepared by Flexible Investment Solutions, Investment Fund with the aim of delivery of basic information about the Real Estate Investment Project in Prague (the Czech Republic).

The aim of the Presentation is to form the general vision of the Project its investment prospect with the addressees.
Kindly note that in order to make weighed decision on participation in the Project, the recipient is required to conduct his/her own independent study and evaluation of the Project.

The Project provides for the purchase of big private house with a total area of 643 m2 and two land plots with a total area of 1,893 m2, as well as action plan to improve on the investment’s image as destination of the property object with a view to resale or lease it.

At the moment the house is in the midst of reconstruction which makes it possible to take into account all needs and demands of future owners to the fullest extent possible during repair.

Resume

The Real Estate Market of the Czech Republic was chosen as a priority for investment, as it is characterized by:

  • low investment risk, as the Czech Republic is part of the European Union. According to estimates of Deloitte in Life Quality Rating in 2018 the Czech Republic took 26th place in the world. Also, the Czech Republic takes 11th place of country rating in EU based on the results of 2018 (according to Moody's). It is the best indicator among all new countries;
  • high level of returns compared to the other EU countries. In 2017 according to the real estate market growth rate the Czech Republic took the leading place among the EU countries (according to Eurostat).

Sustainable economic development of the Czech Republic is one of the bases for country’s real estate market growth. According to data of the Czech Statistical Department, the growth of the Czech economy since 2014 is 2.5-5% annually that is significantly ahead of the indicators of economic growth in the EU as a whole.

Being at the heart of Europe the Czech Republic has an advantageous geographical location, high standard of living, wide opportunities in terms of own business conduction, employment or training.

Results of Deloitte survey showed that non-residents esteem the Czech Republic as a safe and attractive country. In the ratings of The Global Peace Index Czech Republic takes 6th place and Prague is in the TOP-30 of the safest capitals of the world for life. Based on the results of 2018, the capital of the Czech Republic took 1st place among the greenest cities in the world (Green Cities Index 2018).

Since 2014 at the Czech real estate market has been occurred stable price increase. 2017 was a record breaking year: according to figures provided by Eurostat, prices for Czech real estate have increased at 12% that was the best indicator among all EU countries. According to data of the Czech Statistical Department the price increase for Czech real estate was 8% in 2018.

According to data provided by Deloitte real estate prices in Prague have grown by 47 % beginning from 2014.

According to data provided by UNCTAD, the Czech Republic has the highest rate of overseas investment per head among the countries of Central European region, exceeding $ 11 thousand per resident of the country.
According to research conducted by PwC, the consulting company, Prague makes the TOP-20 of the most investment-attractive cities in Europe in 2019.

It is worth to note that the Czech real estate market is notable for European Construction Standards, clear and stable regulatory guidelines, making investments in this market even more attractive.

A distinguishing feature of the Czech real estate market is relatively low construction volumes owing to involved construction activity permit procedure which can be delayed for 7-10 years.

In front of low volumes of construction in the Czech Republic, the demand for real estate in the country has been growing continuously since 2013. According to the Czech Statistical Department, as a result of a stable excess of demand over supply, real estate prices have increased by 41% since 2013 in the whole country. In contrast during that period, growth of real estate prices in the EU was 20% totally.

It can therefore be concluded that investments in the Czech real estate market have reasonable investment risk at return level far exceeds mean level for the countries of the European Union.

Description of the House of Land Plots

The house is located in a prestigious, beautiful and picturesque residential area of Prague.
There are primary and secondary schools, Lidl and Penny, pharmacies, cafes, restaurants, football fields, tennis courts, a beautiful pond and the historic Khvaly Castle close to it.
Big supermarket, Černý Most, with a lot of shops, restaurants and multiplex cinema is off the house.

The total area of two land plots is 1893 m2.
1st plot (where the house is located) is 848 m2.
Including:

  • Building area - 283 m2.
  • Garden - 565 m2.

The total area of 2nd plot is 1045 m2 whereon a possibility of development is foreseen.
It is possible to build one or more houses on the plot or combine two plots and get a luxurious garden with an area of 1,610 m2.

Description of the house:

  • Number of stores: 3.
  • Total rooms: 10, including 5 bedrooms, 4 bathrooms with toilets.
  • The total area of the house is 643 m2, including:
    • Residential and non-residential premises: 518 m2.
    • Terraces and balconies: 89 m2.
    • Garage for 2 cars: 36 m2.

There is a leisure area with large heated swimming pool, Jacuzzi, sauna, area for workout room, shower, toilet and laundry on the ground floor with garden exit.

There is large living room with a panoramic view on the glass wall with a height of 8 meters, with a leisure area and a fireplace on the ground floor. Besides there is a large kitchen, a dining room with a bar, a lounge with billiards, a cabinet with a piano, a lobby with a wardrobe, a bathroom with a guest toilet and two-car garage exit. The interior is decorated with wooden panels and elements.

There are 5 bedrooms, each with balcony exit or a spacious terrace having exciting land view on the second floor. Owners’ bedroom equipped with own wardrobe, bathroom with Jacuzzi and terrace exit.
Another point of interest of the house is a two-story children's room consisting of a bedroom and above there is a comfortable room under the roof, which can be a wonderful playground for children.

Project’s Financial Indicators

An assessed value of the property, which includes the house and two land plots, is about 1.45 million Euros.
It is possible to buy either the property itself or a company that owns the house and land plots.
Also it is possible to get a credit for an investor in Czech bank allowing paying part of the transaction value, and the rest (up to 50% of the cost) to apply for a loan at a low interest in the Czech bank.
It is expected that within 1-2 years the cost of the house and land can grow by 30-35%. An existence of the second plot of 1045 m2 in size is an additional benefit for the investor. The plot can be used for the construction of one or more private houses for sale or rent.
The estimated cost of the second plot that can be received now is from 450 thousand Euros.

Conclusions of the Project

Proposed Project has good potential and high chances for successful realization as:

  1. The property is located in a prestigious district of ​​private houses on the outskirts of Prague, with a developed infrastructure, convenient transport interchange having comfortable conditions for rest and pleasant spending time.
  2. The 3-storeyed house has a lot of interesting decisions: a large useful area of ​​the building and a well-targeted planning allowing organization of maximum comfort and convenience for life, taking into account all the tastes and needs of future owners.
  3. An existence of 2 plots of land.
  4. The possibility of credit applying significantly reduces the need for cash when buying property.
  5. Significant potential for further growth of the property cost over the next few years.