Smaller apartments, luxury penthouses and villas in Prague are still offering interesting long-term appreciation. All you have to do is bet that the Czech capital’s standard of living will keep catching up to that in Europe. Certainty is offered by properties in the most luxurious locations, with a view of the unmistakeable Prague Castle or the Vltava. The heritage-protected historical centre will simply remain an exclusive matter, says Denisa Višňovská, a partner at the LEXXUS estate agency.
Let’s start with a more complicated question. How are sales going on the current Prague market? Are you too fighting a fall in interest, the same as everybody else?
The change in the market dated no later than the second half of 2018 has affected everybody and LEXXUS is no exception. Developers are fighting rising costs, raising prices and some customers simply can’t afford a place to live. More than at any other time, it’s important to sell efficiently, i.e. to the right people. Anybody can make sales at a time of growth. Only the capable can sell in worse times. Despite the fall in the market there are customers for all categories, from the middle to the luxury segments. We sold 60% of one luxury project in two months, we sold half of another project with houses before it was placed on the market. Which means that it is possible. It’s just necessary to adapt. At LEXXUS we can do this, but at this complicated time we are seeing an increase in clients that want specific properties from our range (in comparison with the same period in previous years).
So is it enough to find the right estate agency?
The time when it was enough to approach capable estate agents with contacts are long gone. It’s crucial to have a good product. Not even the best can push against the strength of the market. It’s more about getting in front of events, selling fast, efficiently and actively. Nobody has ever sold anything by complaining about the market. And if somebody tries to sell by reading that the average price is CZK 100,000 per square metre and saying that his project is above average, so the price is CZK 125,000 per m2 and then complains that customers aren’t coming in, then he should look in the mirror. You can’t sell by waiting until clients start to walk in by themselves. It’s always necessary to do something to achieve it and to tailor products to clients.
And how can an estate agency or agent help with this?
A few years ago, at LEXXUS we noticed that developers were diving into projects that everybody was shaking their heads at - inappropriate layouts, the location did not match the standard of construction, the price was wrong. Therefore, we assembled an analytical team that works with a developer when setting up a project, so that the range of apartments corresponds to clients’ moods and the market’s requirements and the project increases in value at every stage. We’re proud that developers take our studies and proposals into consideration and banks work with them when assessing the financing of projects. In the case of a good product it is markedly simpler to achieve better results.
And what about the customers? Is it possible to do things differently when selling real estate?
It’s true that we can’t change much about the basic contact. A top agent is still the basis of a successful transaction. An agent is a negotiator between the developer and the client, his abilities are always decisive in the end. We always want both parties to be satisfied, so that we maintain trust in all situations. The basis is still perfect and discrete service, understanding of both parties’ needs and the ability to look for a compromise. In particular in the luxury segment, sales are governed by the personalities of the seller and buyer and there is no simple recipe. The fact that we have to listen, understand and, in the end, find a solution, does not change in the real estate business.
Can clients be attracted by marketing or is it still true that contacts are decisive?
Great contacts are always a help, but I think they’re a matter of course for a leading estate agency. Marketing provides a great advantage on today’s market. Start from identifying a customer, continue by approaching him using all channels, from a letter to online marketing and good PR, this can sell a project fast and with a fraction of the costs that developers usually assume. But, as I mentioned, what is fundamental is a good product and the customer’s trust. These two advantages should be supplemented, not replaced, by good marketing.
Let’s look at the trends. What is moving the Prague market now?
Clearly, investment properties of all standards. A large number of people that need to live somewhere and can’t afford their own properties are coming to the city. Investors are now buying a quarter to a half of apartments in the projects we offer. They are looking for appreciation over one or two decades and assuming that in this period there will be at least one stronger correction. They are, however, betting on the long-term enrichment of Prague, and therefore on unavoidable price rises.
How do projects for investors look? What are they buying? Do they have preferences different to ordinary residential clients?
Smaller investors concentrate on apartments from 30 to 50 metres square with studio (1+kk) or single-bedroom (2+kk) layouts. At these sizes rent on the market keep them competitive. We are currently offering a typical investment project – Byty u Hvězdy – with small apartments at very attractive prices in Prague 6. This location has huge potential for price growth. A role is obviously played by accessibility by car or public transport and the presence of garage parking spaces. Larger investors are going through the market and looking for everything from small apartments to luxury penthouses and villas. Basically, they are after every opportunity that has the potential for an attractive profit.
Do you see any room for price reductions on the market?
With regard to the prices of construction work and materials, we can’t expect any mass fall. In addition, there is a lack of thousands of apartments in Prague and the population is still rising. Badly priced projects are gradually getting cheaper, but high-quality buildings will maintain their price and increase it over the long term. It’s true that a correction will arrive sooner or later, but let’s remember what the crisis of 2008 brought. A temporary fall in prices overcooked by unprecedented growth.
You are active in the middle and luxury segments. What does luxury mean in Prague?
The top segment has lots of forms. From unique historical buildings to new, exceptional projects designed by leading architects. However, they have one thing in common. Emphasis on top quality in all regards. Location, space, fittings and services must be of the highest standard. An ideal property has a view of Prague Castle, the Vltava and, a little, also of green space. A place’s history also has a significant value. If an address was made famous by a well-known person or a historical event, its attractiveness rises.
What locations are among the best in Prague?
The most prestigious addresses include Malá Strana, Staré Město, Josefov, Nerudova ulice, Ke Hradu and other very well-known locations. Outside the historical centre they are Bubeneč, parts of Vinohrady, Janáčkovo nábřeží and also neighbouring parts of the wider centre.