Small apartments are an efficient and affordable housing option in attractive locations of Prague, says a real estate expert
The purchase of micro-apartments dramatically strengthens by tens of percent. Smaller units represent a strategic compromise between a reasonable acquisition price and investment return through rent. According to real estate experts, this trend will continue in the next period.
According to the owner of Trigema company, Marcel Soural, over the past ten years, the average size of a new apartment has decreased in the metropolis by ten square meters. According to him, essentially one entire room has dropped out of such an apartment, as reported by SeznamZpravy.cz.
An analysis by the Sreality.cz server has shown that demand for micro-apartments, i.e. units with an area between 16 to 30 square meters, has significantly increased in the Czech Republic in the second quarter of this year. Compared to the same period last year, it was 56 percent.
"In the last year, we have really noticed an increased interest in smaller housing units, especially 1+kk and 2+kk layouts. This trend is especially noticeable among clients looking for an investment opportunity or efficient and affordable housing in attractive locations in Prague,"
said to LP-Life editorial staff the founder of Y&T Luxury Property, Elena Jakubovič.
The increased demand for very small apartments is indicated in the analysis by the server Sreality.cz also by the average time of their advertising. Compared to apartments of other sizes, they are advertised for the shortest average time, that is 57 days. On average, an apartment is advertised for just under two months.
The trend of smaller apartments is also met by the current demographic reality. The number of one and two-member households is gradually growing. The relatively high divorce rate and increasing average life expectancy are to blame.
What is small, seems cheap at first glance
In terms of per square meter, such units are expensive, but the final price greatly influences people's decision. According to an analysis by the website, the rate of apartment price inflation in the Czech real estate market was stable during the first half of the year. Year-on-year offer prices grew from 16.5 to 17.7 percent. This goes hand in hand with decreasing interest rates. With lower mortgage rates, interest in buying one's own apartment increases.
"In our portfolio, you will find both exceptional residences in the highest price category exceeding 50 million crowns, which clients purchase for their own housing, as well as smaller properties, which the same buyers choose as an investment. They perceive housing as a stable, tangible, and long-term valuable form of capital investment,"
pointed out real estate expert Jakubovič to one of the common arguments why there is an increased interest in such apartments.
Rents Make for an Interesting Income
Rents, which are a source of income for investors, increased by 3.2 percent in the second quarter of this year compared to the first three months, as can be inferred from the data of Deloitte Rent Index. On average, a square meter was rented for 326 crowns per month.
"It can be said that rental prices are rising across the country. However, regional differences reflect the specifics of individual markets, such as the availability of services, job opportunities or the state of infrastructure. For example, in Hradec Kralove, we see a strong increase in demand, which drives prices up. Traditionally, apart from Prague, the most expensive cities include Brno, Central Bohemian Region, Zlín and Pardubice. At the opposite end of the spectrum are Ústí nad Labem and Karlovy Vary, where prices in the only monitored city have remained unchanged,"
said to the Czech News Agency the director of the real estate and construction department at Deloitte, Petr Hána.
From the perspective of types of properties, rents in brick houses increased the most, where the rent increased by 3.2 percent. In panel buildings, the price increased by 2.9 percent. The highest average rents are in developer projects, which, however, constitute the smallest share of the market.
Prices will continue to rise
Smaller apartments often also target a specific group of tenants who cannot afford a larger unit or do not want to share housing with other people. Their number may increase further. According to Jakubovič, the prices of apartments in the capital will continue to increase.
"Based on current market trends, we anticipate that interest in smaller residential units in Prague will continue to grow in the coming months. Among the reasons are, for example, that the prices of larger apartments are currently rising faster than incomes and rents in the segment up to 25 square meters reach 600 crowns per square meter, which significantly increases the attractiveness of investments into micro apartments. An old known factor also remains that the supply cannot keep up with growing demand and the implementation of new projects are limited administratively and logistically. We expect growth not only in smaller apartments, but across the entire residential market in Prague and its surroundings. At the same time, we also anticipate a continuing increase in rental prices,"
Jakubovič explained.
It turns out that the small apartment market will continue to thrive. Most likely in places where there is a large excess of demand over supply. One of the main factors of their popularity tends to be price affordability. Even if the price per square meter can be higher than larger apartments, the total price is lower. This makes them a financially accessible option for residents who can't or don't want to invest in larger properties.
Sources: author's text, own questioning, CTK, SeznamZpravy.cz, Sreality.cz
