The share of residential transactions in Prague within total investment volumes has been increasing since 2023, according to Savills' Rental Housing in Prague report. In the first half of 2024, it reached almost 18%, equivalent to €158 million.
In the second quarter alone, it accounted for 22% of the total volume. These recently completed transactions mainly involve rental housing projects, such as Vysočanský mlýn, purchased by the MINT Residential Fund, Nová Elektra, acquired by AFI Europe, and the purchase of Rezidence U Šárky, Xplace Hranička/Waltrovka and Xplace Milovice by the Prague Archdiocese. Historically, the share of residential transactions, which comprised mostly single apartment buildings, did not exceed 5%.
Prague is the largest market where rental housing is gaining traction. Currently, the city has 4,130 modern rental units, meaning those built or renovated by developers and institutional investors specifically for long-term rental purposes. Since 2021, their capacity has increased by 65%. There are currently another thousand rental apartments under construction, and developers are preparing more than three thousand additional units. In addition to modern apartment buildings owned by institutions, the rental housing sector also includes co-living spaces, private student dormitories, and senior housing.
Fraser Watson, Head of Investment at Savills, says: "The growth in investment in rental housing has also been driven by a shift in developers' approach. Due to expensive mortgages, regular buyers have disappeared from the market, and entire blocks are now being sold to institutional investors. The past few years have acted as a catalyst for change for developers. Although selling an entire building might result in a small loss of total revenue received from individual apartment sales, this option is easier and more convenient for developers. We will see how the “Built To Rent” market shifts and develops as the individual residential housing sector starts to pick up momentum and prices once again threaten to run away from affordability for the typical homeowner."
"We expect rental housing to exceed last year's volume, making 2024 one of the most successful years for this real estate sector. Rental housing has significant growth potential, supported by the current conditions in the homeownership market. As a product, rental housing is becoming increasingly popular among investors, and we therefore expect a healthy level of activity in this sector next year as well," adds Vojtěch Wolf, Senior Investment Analyst at Savills.
