Czechs will be forced to change their priorities regarding rental housing, as macroeconomic indicators and developments in Western European countries suggest, says in an interview for Property Forum Jiří Vajner, CEO of Creditas Real Estate, a company that wants to become a leader in the Czech rental real estate market.
You have recently rebranded from the original V Invest to Creditas Real Estate. What made you take this step?
The rebranding, which took place at the beginning of this year, was the result of a long-term objective. This is to create a real estate division within the Creditas Group. It was a logical step. The group has long invested in real estate, such as residential and office buildings, warehouses, industrial complexes, and shopping centres. Creditas Real Estate covers all the Group's development activities. It offers the acquisition and professional management of acquired properties, as well as the preparation and implementation of residential projects for rental and owner-occupation.
The transformation of V Invest into Creditas Real Estate took five years. V Invest has been active in the Czech property market as a boutique developer for thirty years. Thanks to this, the group has acquired the necessary know-how and combined with a strong capital base we have the potential to focus on large projects throughout the Czech Republic. Creditas Real Estate's goal is to build a portfolio of 5,500 apartments over the next ten years, including thousands of rental units. We aim to become one of the leading providers of rental housing in the Czech Republic.
What kind of development are you focusing on?
We focus on our own development projects, mainly in the residential segment in Prague and other large cities. We also invest in land with potential for future development.
Where are your development projects?
We have several projects in the pipeline. This year, we have approved two large buildings. The first is the Loox apartment building in Prague's Prosek district. In March, we started renting out all 85 fully furnished apartments and 10 commercial units. At present, all apartments are already rented. The second building is Jinonický zámek in Prague 5, which has undergone a very demanding reconstruction over the past three years. The result is a modern and unique apartment in a unique historical complex with 51 units ranging from 1 to 5 bedrooms. Thanks to the successful reconstruction, Jinonický zámek has reached the finals of the Building of the Year 2023 competition.
We are proud of the U Milosrdných luxury apartment project, which is being built in the Prague 1 conservation area in a gap near the Agnes Monastery. The apartment building, designed by architect Zdeněk Fránek, features many unique elements and constructions developed especially for this project, such as a hand-ventilated corrugated façade or windows with golden louvres. We completed the shell construction this year and expect all 27 units to be completed and ready for occupancy in early 2025.
We are also currently completing the first phase of the Nové Boroviny residential project in Kladno, where a total of 240 apartments ranging in size from 1+kk to 4+kk will be built in two phases. In the southwestern part of Pilsen, we are developing the Nová Valcha district, where more than 1,000 new residential units will be built in eleven phases. In addition, we are considering the purchase of an already completed rental building with fully equipped apartments in Florence. We have more in the pipeline. These are both smaller boutique projects left over from the V Invest era and large development sites, particularly in Prague and Brno.
You have been working on the reconstruction of Jinonický zámek for three years. What was it like to rebuild a historic castle in a time of so many crises?
It was definitely a big challenge. During the approval process, archaeological research uncovered the remains of a medieval fortress, which meant that the project had to be modified on the fly, especially in terms of parking and the shape of the courtyard. This meant further negotiations with the conservationists, which prolonged the whole process considerably. The actual reconstruction began in the autumn of 2020. This was complicated by the war in Ukraine, which led to a sharp increase in the price of materials and construction work.
We approached the whole reconstruction very carefully, working closely with conservationists and hiring leading experts for specific types of work. We took care to restore original features such as the beamed ceilings, roof trusses, stucco decoration on the facades, the historic sundial, and the Baroque fountain. The icing on the cake is the tower with a working historic clock. The final appearance of the whole complex is now truly impressive and has an unmistakable atmosphere. In addition, it is a closed building where only the owners of the apartments or their guests have access to the courtyard. This guarantees their security and privacy.
You predicted the development of rental housing too. Do you think that the Czechs, who have been clinging to ownership, will change their current priorities?
I think they will. Current macroeconomic indicators suggest that rental housing will become a reality for a large percentage of the Czech population and that interest in it will continue to grow in the future. Exactly how large this percentage will be is a question, but if you look at Western European countries such as Austria, Luxembourg, Sweden or Denmark, the proportion of the population living in rented accommodation is significantly higher than here. In Germany, it is even close to 50%. Vienna is the mecca of rented accommodation, with over 60% of the population living in this way.
In our country, there is a deep-rooted perception that living in rented accommodation automatically means a lower social status because we cannot afford to live in our own flat or house. This impression assumes that an owner-occupier has a home after paying off the mortgage, while a tenant has nothing, even after years. But this is not always the case. While an owner-occupier puts his or her savings into buying a home, a renter may invest in an alternative asset. If he or she chooses one that, after adjusting for all risks and costs, will outperform the property in the long run, the tenant may even end up richer than the owner years later. Moreover, compared with a 30-year mortgage, renting offers enormous flexibility.
You have repeatedly said that you want to be a leader in the rental property market. How do you intend to achieve this?
Our big advantage is the background of a strong investment group. As I mentioned earlier, our plan for the next ten years is to build 5,500 apartments, of which 1,000 will be rented. We expect the total investment to be CZK 27 billion (over €1 billion). We intend to focus on large projects throughout the Czech Republic.
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