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News Release

Prague

Residential schemes in Prague – half of the new residential units currently offered on the Prague market are under construction


Prague, 22 May 2012 – Compared to the previous few years, the Prague residential market witnessed an increased amount of new residential schemes which commenced construction during the second half of 2011. Residential units under construction currently form half of the total number of new vacant flats in the Czech capital. At the beginning of 2012 there were 7,750 new vacant flats available for sale, out of which, 49% were under construction, 30% were in completed projects and 21% in a pre-lease phase. In comparison to the beginning of 2011, the annual figure of new available flats decreased by 11% (at the beginning of 2011: 8,700 vacant new units were available in the Prague market; compared to the beginning of 2012: 7,750 vacant new units available), however the total number of flats available in both projects completed as well as under construction remained practically the same (see table below). “Developers have begun construction of a larger amount of residential schemes in the second half of 2011. The main reason for that was the growing demand (which showed a 40% increase y-o-y) and also a number of previously postponed projects that developers decided to launch to the market during this time,” says Ondřej Novotný, Head of Research Jones Lang LaSalle Prague, and continues: “unfortunately, we do not expect such favourable market conditions this year and the larger amount of commenced projects may result in an increased number of vacant completed flats in Prague. For 2012, we expect between 3,500 and 3,800 units to be sold in Prague, which would mean a 10-20% y-o-y decrease.”    
    
„Currently, 80% of all new available units in Prague are either completed (30%) or under construction (50%). Developers make allowances of between 18 and 24 months for sales process. The time normally required for buying a new flat (from first market monitoring until signature of a purchase contract) has increased and varies between 6 and 12 months on average. Projects that have been on the market for more than two years form only 10% of new flats available in Prague,“ says Iva Nováková, Head of the Residential Agency at Jones Lang LaSalle Prague.              
The largest stock of residential development can be found in Prague 9, Prague 5 and Prague 10. All three districts account for 70% of all new residential development in the Czech capital. The biggest interest in terms of total number of units is still in smaller and mid-size apartments (2+kk and 3+kk). Throughout 2011, these two layouts covered almost 70% of all sales. However, this stats do not describe an emerging trend of smaller units being merged into bigger apartments which we monitor especially in locations suitable for family housing.