Central Group: New building law can end the paralysis of permitting

According to the latest data from the Czech Statistical Office, 2,649 flats in apartment buildings in Prague received building permits between January and May this year, marking a 53% increase year-on-year. In May alone, 471 flats were permitted, a significant improvement from the previous May when only 17 flats were approved across the entire metropolis. While this growth is positive, it still falls short of the city’s needs. Prague requires at least 10,000 new flats per year, meaning that a simple average suggests 4,170 flats should have been permitted in the first five months.

Prague is likely to see its housing deficit widen again this year, with the shortfall nearing 100,000 apartments. Despite this, investors are preparing to develop almost 145,000 flats in Prague. The primary issue is the slow permitting process, which can take over a decade to approve an apartment building. The new building law, though not perfect, is an improvement over the previous one and offers hope for resolving the current permitting paralysis. However, immediate miracles shouldn’t be expected. The necessary regulations and digitalisation have only recently been introduced, so both officials and investors will need time to adapt to the new system. It is expected that the permitting process will initially face some delays as the system is fine-tuned. Swift debugging will be essential to avoid unnecessary delays, and even then, it will take time for the results to materialize in practice.

Let’s hope this transition period is brief and that the struggling construction industry soon experiences a positive turnaround. This would benefit everyone: investors and construction companies could plan and operate more efficiently, housing might become more affordable, and the state would gain significantly from increased construction activity.

Source: Central Group