Czech funeral services cash in more than 2.5 billion crowns from citizens every year. At first glance, it might appear that there will be a significant increase in sales in the coronavirus times. But the opposite is true. Despite the increased number of deaths, funeral services in the Czech Republic aren't exactly doing great.
Contradictory effects of the coronavirus
The vast majority of people prefer cremation to burial in the ground. Cremation is usually cheaper by more than a half. If there is no ceremony, it can be arranged starting at 14 thousand crowns. Even before the coronavirus pandemic, 80% of citizens in our country chose cremation. This number has been growing in recent months. One of the reasons is the current government restrictions, which allow only a limited number of people to be at the funeral, specifically 20. From Thursday, December 3, 30 people will be newly be able to attend the funeral ceremony.
"Based on a government resolution, we banned singing in the ceremonial hall. We also canceled the dressing and styling of the deceased. The body is stored in a designated container (hygienic bag),"
Marie Dlouhá from the Funeral and Cemetery Services of the City of Brno wrote to us. The funeral services we contacted agree that they do not feel any significant changes in the funeral market, with the exception of the increase in direct burials.
"We didn't have to limit or disrupt services in any way. Prices for funerals remain the same,"
we learned from a representative of the Charón funeral home in Ostrava, which has been in the industry for almost 30 years.
Are people really dying more?
Data to support a higher number of deaths have been lacking in our country so far. However, this has changed in recent days, when the Ministry of Health also presented data according to which the number of people who have died in recent weeks has increased by one fifth from the usual. The second to last month of the year is a period of increased demand for funeral services every year, so even this increase did not catch funeral homes unprepared.
"As every year, November is strong when it comes to deaths. Every year before Christmas, there are also more funerals without a mourning ceremony, which was boosted by COVID this year,"
told us Jaroslav Mangl, chairman of the Association of Funeral Services in the Czech Republic, who is careful in his views on the increase in deaths due to the COVID-19 pandemic. However, the Minister of Health Jan Blatný presented data according to which COVID-19 was the main cause of death in more than a third of deaths with a positive test. At the moment, however, even if the situation were to worsen, there is no danger of funeral services being unable able to handle cases, which has happened in recent months in some other countries. Despite the increase in demand for cremation, many of the Czech funeral services would be able to triple the current amount.
What are the prices of tombs or graves?
Hand in hand with breaking down some taboos and accepting death as part of our lives, there is also a growing interest in graves and tombs. This gradually increases their prices, especially in large cities. One's final resting place can only be rented, one can only buy the structure itself. It can be built from scratch if circumstances allow. An urn grave from twenty thousand, a classic grave for twice that, or a tomb for upwards of 100 thousand crowns. The second option is to buy the structure in the desired location from someone.
The price per square meter of a built grave or tomb can rise to tens of thousands, depending on the location or materials used in well-known cemeteries in Prague. For example, a family tomb in the Olšany cemetery with a size of 3 m² is currently offered for 180,000 CZK (60 thousand crowns per m²), a tomb with a size of 3.4 m² made of polished syenite in a lucrative location in Malvazinky is based on 280 thousand Czech crowns (82 thousand CZK). for m²). Urn graves are much cheaper - you pay CZK 10,000 for 1 m2 in the Olšany cemetery, in Vršovice you can even get an urn grave with the size of 3 m² for 19 thousand crowns (ie just over 6,000 CZK per m²). In smaller towns, you can get a similarly large building for a much lower price (for example, in Mělník you can get a magnificent ancient tomb of 9 m for 279,000 CZK (31 thousand crowns / m2), in Moravský Šternberk you can buy a tomb for approximately 9 thousand CZK per m²).
The rent is paid to the municipality or registered church. For graves, the shortest rental period is set at 10 years, for tombs at 20 and for urn graves, the lowest limit is five years. However, contracts are often signed for decades to come. The amount of rent in all twenty-nine Prague cemeteries is 120 crowns per square meter per year. Similar prices are available in cemeteries in Brno and Ostrava. A plot can be rented by anyone who holds an identity card.
Undertaking on the stock market
As controversial as it sounds, holding long-term shares in the funeral industry is an interesting investment opportunity with a relatively high chance of making a big profit in the long run. For example, in America it is not customary to save on one's departure to their final resting place, and spectacular funerals have a long tradition and societal significance. Shares of American funeral services thus represent an interesting possibility of passive income. The growing and aging population ensures that demand for products in the funeral industry is maintained. The increasingly popular, cheaper burial methods, now popularized by the global pandemic, are reducing the income per person, but the sum is ultimately enough to increase funeral industry income by a few percent each year. And with it the profit for investors.
Service Corporation International manages approximately 380 cemeteries, operating in 43 US countries, Canadian provinces, and has expanded to Europe, specifically Germany. The price of one share is around $48. It pays a stable dividend every quarter. In 2020, regular earnings ranged from $0.19 to $0.21 per share.
Carriage Services, Inc. from Texas, which has been operating since 1991, is also a player on the stock market. It offers its shares on the NASDAQ stock exchange. The current price per share is $27.19. Dividends are paid quarterly. This year, their amount ranges between $0.075 and $0.10 per share.
Another option is StoneMor Partners L.P. operating since 2004. The price of one of its shares is currently $1.46.
And it's not just stocks. The purchase of an apartment or house in the immediate vicinity of cemeteries, or directly on their premises, can also be an interesting investment opportunity. Two years ago, real estate expert Elena Jakubovič addressed this question, predicting that "prices of apartments near cemeteries will go up". Reading interesting information in her lines can inspire you to make a remarkable investment with very interesting potential.
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That's exactly how many people died in the Czech Republic in the first 43 weeks of this year. This is an increase by 3,520 deaths compared to the same period last year. Compared to the average for the years 2015-2019, which amounts to 91,673 deaths in the first 43 weeks of the year, this year's increase is even higher. The sad number rose by 4,376 deceased. It is the deviation from the long-term average, which is usually stable in a given area, that scientists consider a reliable indicator of the severity of the epidemic.