The number of flats on the market is declining from year to year. Especially in Prague. In particular, there are fewer dwellings in new buildings available. Many prospective buyers are therefore starting to turn their attention to older renovated apartments.
"For those who find investing in a new apartment too financially demanding or the time spent waiting for the apartment too long, the reconstruction of an older apartment seems like a good opportunity to acquire and value a property,"
Apartments that enter the market as White Walls or Shell & Core offer an approvable minimum. In the case of White Walls, in this context, we are talking primarily about apartments where floors, tiles or sanitary facilities haven’t been completed. Doors are often missing as well. Shell & Core apartments, in addition to the previously mentioned, also lack internal partitions and sometimes windows.
It is then up to the owner of the apartment and the interior designer to decide what the final form and arrangement of such a unit will look like. Naturally, this approach has both advantages and disadvantages.
"It gives the owner ample opportunity to incorporate his or her own ideas and wishes. Whether it's non-traditional windows or doors, or internal installation,"
"Many people see a way to better housing in expanding and altering a property they already own. They build annexes, lofts, or convert non-residential premises, such as garages, into livable rooms,"
said Jiří Šedivý, secretary of the Association of Czech Building Societies, in a recent interview for the Lidovky.cz website.
On the other hand, a number of finishing works tie into each other, and it is not always easy to assess whether a defect was caused by negligence in the original construction work, or later, during the completion of the apartment. This is the case especially with luxury real estate, where even the smallest mistake immediately shows. In addition, sometimes it turns out that the implementation of further changes is no longer possible, which permanently damages the value of the property.
As the offer of apartments decreases, those interested in housing take a step back and consider whether reconstruction wouldn’t be a better option. The shortage of land for new building projects isn’t the only problem here - vacant lots in the wider city centre that could be built up are also rare. Many real estate entrepreneurs respond to the increased demand, focus on existing houses in older developments and have them revamped.
The fact that the number of people moving to Prague or Brno increases every year, is another argument for reconstructions. At the same time, a young generation whose parents are materially well-off is entering the market. Young people want to be surrounded by the buzz of a big town, which corresponds to the preference for living in smaller apartments situated in the city centre. The trend of the so-called singles, who wish to have everything within walking distance and aren’t interested in taking care of a large apartment or house, also plays an important role.
"This is a highly liquid investment, which significantly reduces the risks. One of the factors that moves the investment housing market is the fear of high inflation in the coming years. Investing in real estate can be a "safe haven" and thus protect your savings in financial crises,"
claims, for example, Serge Mayer from a development company that focuses on the reconstruction of older houses in Prague.
Nevertheless, reconstructions aren’t exactly cheap. The renovation costs can range from about 800 000 to 1.5 - 3 million crowns. It depends on the previous condition of the apartment, its size and what all needs to be finished or modified in it. The prices at which shell & core and white walls apartments are offered tend to be a bit lower than in the case of fully completed apartments. The main factors, however, are the location where the property is situated, the quality of the house and the size of the apartment. If such a real estate is located in the centre of Prague, the prospective owner will often pay from about 120 to 160,000 crowns per m2.
Today, renovated apartments make up about a fifth of the total offer of new apartments in Prague. These include, for example, larger apartments in apartment buildings from the turn of the 19th and 20th centuries, which are gradually being transformed into several smaller ones. This is also associated with the renovation of the entire building and the replacement of windows, wiring and installation of new elevators.
Examples of where this is happening are the Old and New Towns, Vinohrady, Vršovice, Žižkov and other Prague districts. This is also confirmed by the current research by Serge Mayer’ development company. The analysis proves that almost two-thirds of the respondents consider investing in an apartment in the centre of Prague to be promising, even if short-term rentals should never return to their pre-pandemic niveau. However, it should be noted that some Shell & Core or White Walls are available even in new construction projects. Czechs predominate among prospective buyers.
"Compared to previous years, we have seen a change in the proportion of investors looking for properties to buy. The interest of foreigners living abroad decreased, while the interest of domestic investors or Czechs living abroad increased. It can be assumed that this was also due to complications caused by the impossibility of property viewing or travelling between countries,”
Renovated apartments may come even more into the forefront of interest due to the fact that the prices for new housing - especially in the most attractive locations - are likely to continue to rise. In addition, as the capital’s current strategy suggests, the wider centre of Prague should become denser. New housing projects somewhere in the fields on the outskirts of the metropolis could therefore be rare in the future.