The strength of interest in the Czech residential property market, chiefly in Prague, has recently escalated to new heights.
This phenomenon is commonly ascribed to many factors including EU membership, the overall Czech economy compared to its neighbors´s, strong growth within the Czech middle class, overall lack of quality housing supply applicable to demand, low interest rates and the ever increasing availability of mortgage financing.
Commercial real estate market
To better predict the opportunity of the Czech housing market, it is useful to look at how the commercial real estate market evolved. It is my conflict that the commercial cycle appears to be about a decade ahead of the housing market cycle.
In the early years after the revolution Prague knowledgeable a severe shortage of quality commercial space. Rental prices soared as businesses of all kinds fought over quality, impressive and/or efficient workplaces.
A vacancy was more probable due to a lazy real estate agent than anything else. Beginning in about 1999, the market began experiencing a major decline in rental prices on top of a shift towards the larger and more proficient floor plates of both office and retail space located outside of the Prague City Centre.
Money-making properities
Speaking with perfect hindsight, none of this should come as a shock as the Czech commercial property market is simply following classic Supply/Demand Economics. In the case of money-making properties, it took about 10 years for the Supply/Demand functions to equalize.
Many experienced commercial estate agents will be of the same mind that Prague hit a bottoming out period according to the classic 7 year cycle that is commonly witnessed in modern real estate markets all the way through the world.