Ján Krnáč, Executive Director of Cresco Real Estate, talked to Property Forum about the opportunities in the Czech and Slovak residential market. He also explained the “rent to own” scheme developed for those not able to afford a mortgage right now due to the higher interest rates.
You are the largest residential developer in Slovakia. What has helped and is helping you to overcome major crises of the past years?
The most helpful was responsible planning and keeping the leverage under control. Managing the construction costs and keeping them under control was the major task for us to keep projects profitable.
How do you currently assess the situation in the market in Slovakia?
Due to high interest rates, residential real estate has become less affordable and there are significantly fewer people on the market that can afford to buy. The secondary market is under a lot of pressure which drives the prices down. I think we have overcome the major reductions now and the prices stabilised as well are the mortgage interest rates. The rental market is experiencing growth and rents are steadily increasing. We remain optimistic and expect a rise in demand as soon as the interest rates will decrease in the next two years. This is also one of the reasons why we decided to continue with the construction of the next phase of our largest project Slnečnice. In the summer we started construction of Slnečnice Nad mestom, the first high-rise in the location comprising more than 300 units.
Ján Krnáč
CEO
Cresco Real Estate
Where do you see room for further projects and expansion on the market?
We have several projects in the planning phases in Bratislava and one project in Prague, so we will continue to focus primarily here. There might be interesting opportunities in building rental housing as the government is preparing a support scheme to incentivise this type of housing. But we are too soon after the elections and nothing is set in stone yet.
In June this year, you came to the market with a revolutionary novelty, the Hyponájom service. Could you please explain it a bit?
Hyponájom is basically a “rent to own” scheme for all customers who are not able to get the expansive mortgage due to the higher interest rates. You can move in based on a rental contract and have the benefit of the option to purchase the unit for a fixed price for a period of two years. To keep the product affordable, the rent is based on a monthly mortgage payment equal to a 1% interest and 80% LTV rate for a period of 30 years. This product has become very popular, and we already have had several customers move in.
So far, you operate mainly in Slovakia and in the Czech Republic. Will you expand further to other countries? And if so, where are you going now?
Currently, we have no project in the pipeline in other countries but we are constantly seeking opportunities in Germany and trying to expand further in Czechia.
