Prague Development Company increased its market value to 7.123 billion crowns
Prague Development Company (PDS), a contributory organization of the capital city of Prague, has increased its value by 1.5 million CZK. The Prague City Council (PDS), a subsidiary of the City of Prague, has submitted a regular market valuation of its real estate portfolio, which included 816,000 sqm of urban land intended primarily for residential development. The market value of the valued properties was set at CZK 7,123,980,000 as of 1 June 2023 by the renowned international consultancy Knight Frank. Regular market valuations, common among private property managers, serve as a basis for strategic decisions of the capital city. Prague's strategic decisions on how to dispose of its assets and how to further value them. The market valuation will be an important basis for negotiations on the financing structure for the implementation and operation of urban rental housing projects that PDS is preparing.
The first-ever market valuation of the land portfolio entrusted to the management was carried out by the urban developer in 2021. The value determined by valuation experts from Knight Frank was then set at CZK 2.939 billion. The following year, the market value of PDS's property portfolio increased to CZK 4.298 billion, according to the Knight Frank report. According to the same valuer, the current market value of the real estate portfolio handed over to PDS for management amounted to CZK 7,123 billion.
The market value of the comparable part of the portfolio (i.e. those plots of land that can be compared with the last valuation as at 1 April 2022, when this set of plots was valued at CZK 4.063 billion) was a total of CZK 4.650 billion when valued as at 1 June 2023. Compared to the valuation as at 1 April 2022, the value of the land increased by CZK 587 million.
"I am pleased that PDS has implemented and consistently applied the same professional practices in the management of the city's assets that are normally used by private real estate companies. The growth in the market value of the PDS portfolio is due to several factors: further expansion of the number of locations, professional development preparation of individual PDS projects and also the temporary entrustment of the Nová Palmovka Centre project. The market valuation is a necessary basis for solving the issue of financing urban rental housing projects," says Petr Hlaváček, First Deputy Mayor of the Capital City of Prague. Prague's Deputy Mayor for Territorial Development.
"Regular market valuation, which shows the current, not book, value of urban land, helps to change the perception of the value of public real estate assets and is the basis for strategic decision-making by the city on upcoming investment projects and the optimal structure of their financing. Proactive work by PDS has already resulted in a significant increase in the market value of the PDS-managed land portfolio beyond the "organic" increase in market value. I expect that further significant increases in market values in the order of billions of crowns will occur, especially in the key locations of Palmovka and Nové Dvory. This is the result of a new coordinated proactive system of development activities within the Capital City Municipality. Prague, of which the PDS is an important part. The increase in market values lies mainly in the fact that many sites are being properly exploited or their potential is being increased in terms of economic, social and environmental aspects," adds Petr Urbánek, Director of PDS.
"As evidenced by the submitted market valuation, the activities of PDS clearly increase the value of urban assets. I am glad that we have agreed in the Council of the Capital City of Prague that the PDS will be able to increase the value of the property. I am glad that we have moved away from the mainstream considerations of selling urban land as the only form of its appreciation for the city treasury and have embarked on the path of an active approach to the management of urban real estate. This will leave the city not only with the land, but also with control over what will be built on it, which is no longer possible after the sale, and it will thus help not only the construction of new city apartments in the future," says Adam Zábranský, councillor for property.