CENTRAL GROUP prepares three large housing projects with approximately 4,600 new flats in Žižkov

by   CIJ News iDesk III
2023-05-24   11:00

Central Group is developing three large residential projects here - the Park Quarter, the Centre of New Žižkov and Nový Jarov. About 4,600 new apartments will be built there, as well as school facilities, large green areas and a number of commercial spaces. The total investment costs of these three projects are calculated at more than CZK 40 billion. Prague will receive more than CZK 750 million in investor contributions (so-called contribitions) from Central Group for enabling the construction of these three projects.

"The newly required contributions for Prague increase the price of an average new apartment by about a quarter of a million crowns. This is despite the fact that the investor bears all the costs of decontamination and revitalisation of the entire area when building on a brownfield site. This is really a lot and of course it is reflected in the price of new flats for buyers", says Dušan Kunovský, founder and head of Central Group.

The system of "voluntary" contributions from investors for the possibility of construction was approved by Prague last year. Based on this system, it collects contributions for approving new construction based on the gross floor area (GFA) of the projects under development. For projects where a change in the zoning plan is required (i.e. mainly brownfield sites), the contribution is CZK 2,300 per m² of gross floor area, and for projects built in accordance with the zoning plan, the contribution is set at CZK 700 per m² of gross floor area. The prescribed contributions are paid by the investors either in money or in the form of implementation of public works required by the city, which otherwise Prague would have to pay from its budget.

"Prague is now considering to increase these contributions further. However, this would be a fatal mistake in the current very difficult situation on the real estate market, which would only further deepen the long-term housing crisis," Kunovský warns. In such a situation, many investors would postpone their upcoming housing projects indefinitely. Or investors would change their upcoming projects from housing to other commercial uses that would not require a change in the zoning plan.

The largest residential project in Central Group's portfolio is the Park District in Prague 3. This location is currently the best-selling luxury apartment project in the entire metropolis. The rough construction of the first city block adjacent to Basel Square with 390 apartments has already been completed and will be fully finished next summer. The site is in great demand and more than 70 percent of the apartments have already been sold.

"Our official contribution required by Prague is CZK 291 million in the case of the Park Quarter. In practice, however, our costs for the public buildings we are building here for the city will exceed CZK 400 million," Kunovský calculates. The costs of the complete redevelopment of Basel Square and its surroundings have risen substantially for the investor. The cost of building a large six-class kindergarten, which Central Group is building for the city free of charge, has also increased significantly.

"The biggest benefit of the project is that we were able to negotiate with the developer to change the function of the development. It may not be as well known today, but it was previously planned that a large shopping centre would be built on the site. This would have brought unreasonable passenger traffic. However, there was an agreement and a change to residential use. From the point of view of public interest, I see the greatest benefits in the accessibility, in the new kindergarten and in the new public areas and squares that the project offers not only to new residents but also to existing residents," says Pavel Dobeš, deputy mayor of Prague 3.