The Czech rental housing market is undergoing fundamental change, with apartment downsizing becoming a key trend. While this is often viewed negatively as a sign of housing affordability crisis, institutional rental housing tells a different story.
According to Zuzana Chudoba, CEO and founder of BTR Group, "In institutional rental housing, this is thoughtful optimisation and the future of living." Her company's latest Living Sector Market Report shows the average apartment size in Prague BTR projects dropped to 49 sqm in the second half of 2025, with newly launched projects averaging just 36 sqm. This compares to 66 sqm for new apartments for sale and a Prague-wide average of 65 sqm.
"The difference doesn't arise from investors building 'micro-apartments' at the expense of quality, but from completely different layout composition," Chudoba explains. Studio and one-bedroom apartments now comprise 80% of Prague BTR housing stock, reaching 95% in newly launched projects. For comparison, these smaller layouts represent only 62% of new apartments offered for sale.
The trend reflects institutional investors responding to real demand from young people living alone or in couples. "There's historically been a shortage of smaller apartments in Prague. Institutional investors are reacting to demand and trying to offer apartments that are more affordable, extremely efficient and therefore well-occupied long-term," says Chudoba.
Downsizing works alongside optimisation and shared spaces. Most BTR apartments are partially or fully furnished with professional interior design maximising space efficiency. As private apartment space decreases, shared facilities become essential - including laundry rooms, gyms and community areas. Tenants pay a premium for this standard, with BTR rents averaging 551 CZK per sqm in late 2025, 25% above standard rental portals. Prague BTR vacancy rates hit a record low 2%. "Customers clearly show they don't mind smaller apartments if landlords offer professional management, relationship stability, top interior design and community facilities," Chudoba concludes.
