The frozen Czech residential real estate market experienced a minor shake-up when developer Central Group put fifty new apartments on the market in Prague's Harfa at a big discount. According to the developer, they were sold out in a few hours. The price was CZK 100,000 (€4,250) per sqm, a quarter cheaper than is usual in the locality and a third cheaper than the Prague average, writes Hn.cz.
Central Group is trying to get Prague's new apartment market moving. It has put 50 flats on the market at a 25 percent discount. "It was an experiment to give the market a boost," says HN.cz Dušan Kunovský, owner of Central Group. He mentions that the company wanted to attract attention to the new project in Harp by introducing prices for the first 50 flats out of the planned 400. "We are now evaluating the project and will see if this will be a trend we will follow when launching future projects," Kunovský adds. Although the Czech real estate market has started to revive in recent months, sales of new buildings are still very low compared to previous years. According to data from developers Central Group, Skanska Residential and Trigema, only 650 new apartments were sold in Prague in the first quarter of this year. Although this is 150 more than in the previous quarter, it is about a one-third drop year-on-year.
According to HN.cz, discounts are proving to be a way for developers to sell more apartments. This is shown not only by the example of the Central Group but also by the Brno-based Trikaya group. In recent months, it has reduced the price of housing in its Ponavia project in the Královo Pole district by one percent. And it describes that buyers have increased as a result. "In several cases, these were buyers who had been considering buying an apartment in the project for some time, and this friendly step in the form of a price reduction was the impetus for them to make a final decision," the group's media representative Tashi Erml told the daily. The discounting also worked on the market for older apartments. Interest in them has started to revive in recent months. One of the reasons for this is that buyers are taking advantage of discounts, which, compared to last spring, can amount to more than a million crowns (€42,517) for larger prefabricated flats.
Offers like the one Central Group came up with are also tempting because, unlike older flats, new ones do not come at an across-the-board discount. On the contrary, their prices have risen by four per cent year-on-year. In Q1, developers offered new buildings in the capital for almost CZK 155,000 per sqm (€6,585 per sqm). The selling prices, i.e. the prices people actually pay, amounted to almost CZK 152,000 per sqm (€6,455 per sqm). In practice, the average 70-metre flat will cost more than CZK 10.5 million (€4,457,745). In Brno, according to data from the developer Trikaya, new buildings are about 15-20 percent cheaper than in Prague. However, their prices are not falling year-on-year either.
However, according to Milan Rocek, executive director of the Dataligence project, formerly known as Cenovámapa.org, an across-the-board cheapening of new apartments cannot be expected. This is also confirmed by representatives of the companies. Although the discounts help them attract buyers, they say they cannot get cheaper because of the persistently high prices of construction costs and labour. Although these have started to fall in recent months, they are still about 40 percent higher than in 2021. "We can't sell below cost," said Marcel Soural, head of the Trigema development group. According to the daily HN.cz, Skanska is not going to discount either, and its CEO Dušan Kunovský does not expect to repeat his discount action in any of the existing projects. If he were to discount, it would again be only introductory prices for flats that are not yet on offer.
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