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Where to invest in Czech property

Location has been listed as the key factor to a successful real estate purchase, in fact, the three key factors.

Not only in good times but also in bad times the location is critical. The recession and subsequent fall in property prices in Czech Republic have proven that.

Some flats have been in locations which have seen very little change in value or have been quicker to recover value lost. It has proven a very defensive strategy for investors to have well located properties.

With property it is often true that you get what you pay for and in most cases it is worth paying a bit of a premium in order to get an attractive location.   

In this article we will not delve into the specific areas of each city but just deal with the general principals of location choice in Czech Republic.


1. Pick areas of population growth

Population growth in an area indicates that it is either desirable to live in or that there are job opportunities. Both of these are great for rental properties and also bode well for the long-term price growth of property.

In Czech Republic it is possible to look at the districts and major towns and population growth by looking at the regional stats on the Czech Statistical Office’s website.   

A further breakdown into the different areas of a city is often possible to find via the city’s website but can take some digging.


2. 
Pick an area in the city close to public transport

According to a study on public transportation use, as reported by a Czech Position article in March 2011, Czech Republic leads the EU with 37% of the population saying that public transportation was their main means of travel.

 

Czech Republic has the highest public transport usage in the EU – a big factor in the location decision.


The Prague metro system, for example, is reported to be the seventh busiest metro system in Europe, moving over 1.5 million passengers on a typical day. This reportedly makes it the most used public transport system in the world on a per capita basis.

This knowledge makes it a very important factor when choosing rental properties, especially when purchasing smaller properties when the tenants are less likely to own a vehicle.


3. Know the demographics of your potential rental market

It is also important for an investor to understand where their potential renters will be coming from. For this it is vital to have the feedback of a good local property management team who understand where the renters are coming from.

For example, in Brno for the last few years there has been strong hiring by IBM for IT professionals. Most of their hires have been entry level positions so typically single individuals who are earning slightly above average salary.

We know from experience that these workers typically do not want to live more than 20 minutes commute from their work. This means in Brno that you would not want to purchase a flat targeting this rental demographic in the southern parts of the city.

As another example, in the Ostrava region there are many rentals which are targeted to workers at the Hyundai plant. Where you purchase a property targeted to rentals for the Korean management compared to properties for rental to the Czech factory workers are totally different.

So it really helps either to understand your potential rental demographics or to have access to someone or a team which does.

Next week we will look in more depth at the major cities of Czech Republic (Prague, Brno, Ostrava and Pardubice/Hradec Kralove) and where in these cities the best areas to invest are. 


by 
Nathan Brown - nathan@czechpoint101.com - owner and managing director of Czech Point 101  - "You’re in good hands whether buying, selling or managing property in the Czech Republic."    

 
 
 
 
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