Czechia: Interest in fully furnished rental housing will grow, more and more is being invested
As the number of people living in rented accommodation grows, so will the interest in so-called institutional rental housing. These are fully equipped flats ready for immediate occupation and primarily built not for sale but for rent. This type of housing is more expensive than conventional rentals, yet the pace of landlords and investors in institutional housing in the Czech Republic is growing. In addition to Prague, it could also begin to develop in the university city of Brno. This is according to a regular report of the real estate consulting company BTR Consulting.
"In Britain and North America, the Build to Rent (BTR) sector is characterised by fully furnished apartments, and the Czech Republic is following this trend. This is because the rental market in the Czech Republic is outdated and unattractive. Most of the apartments are old and the owners do not take care of them," said Zuzana Chudoba, founder of BTR Consulting.
In addition to fully furnished apartments, institutional rental housing can also offer a range of services. For example, there can be shared relaxation areas, fitness centres and swimming pools. This is also why the average rent in the BTR sector is significantly higher. According to data from BTR Consulting and Deloitte, at the end of 2023, it was CZK 542 per square metre in Prague, compared to CZK 401 for conventional apartments. The price of energy and sewerage charges, which are regularly increasing, must be added to the value and at the end of the year amounted to CZK 158 per square metre.
According to Chudob, interest in the construction of flats for immediate rent is increasing in the Czech Republic. Evidence of this can be seen, for example, in the transactions made by the largest Czech institutional tenants last year. In Prague, the largest tenant in the segment is Israel's AFI with 859 apartments. However, Trigema is also a big player, leasing 140 apartments in Fragment in Karlin and another 860 apartments are in the pipeline. Affordable Housing of Česká spořitelna is also planning to join the trend, with 693 apartments in the pipeline. The Catholic Church does not want to be left behind either. The Archbishopric of Prague bought 111 new flats through the XPlace platform at the beginning of February this year and 521 more flats are in the pipeline.
Brno is also at the beginning of the development of the BTR segment, according to Chudob. They are currently being developed in the city centre, but they are mostly renovated apartment blocks. Even there, rents are significantly more expensive. For a square meter without fees, a person pays CZK 517, while the average is CZK 325. "Brno should not be underestimated because it is a university city and our research shows that there is a shortage of apartments for students. Also, some foreign companies have offices here, whose managers want to live nicely," Chudoba added. In Brno, for example, some financially secure families run institutional rental housing. However, the developer Crestyl is also preparing 137 rental flats in the centre.
By 2030, a quarter of Czechs could live in rented accommodation, according to BTR Cnsulting. That's also according to the Rental Housing Association, which says the number of people living in rented accommodation could increase by the lower tens of thousands this year.