HIH secures major tenant for Mywest office building in Frankfurt City West

HIH Invest Real Estate (HIH Invest) has successfully leased around 5,400 square meters of office space in the Mywest building at Franklinstrasse 50, located in Frankfurt City West. The new tenant, an insurance company, plans to relocate its entire operations to the site.

Built in 2003, the Mywest office building spans approximately 9,000 square meters over seven floors and is part of a real estate individual fund managed by HIH Invest. It features modern amenities, including a two-level underground car park with 110 parking spaces, electric charging stations, a reception area, and a green courtyard. The building is conveniently located near public transport hubs such as Westbahnhof station, along with nearby shops, restaurants, and hotels.

“We plan to modernize the space in 2025 to meet the tenant’s specifications, including the creation of a larger reception area and enhancements to the green courtyard, which will offer employees a relaxing outdoor environment. Additionally, we are aiming to achieve BREEAM certification for the building,” said Simon Hüttmann, Senior Asset Manager at HIH Real Estate.

Despite the recent lease, approximately 2,700 square meters of office space remain available on the first and second floors of Mywest. Another long-term lease for the ground floor, comprising 980 square meters, was signed in 2023 with the Berufsfortbildungswerk (bfw) vocational training center.

Markus Leuchte, Head of Letting Management Frankfurt am Main, highlighted the building’s flexibility and modern design as key factors in attracting tenants. “Mywest offers flexible floor plans that can be customized to accommodate open-space, multi-space, or individual office concepts. This appealed to our new tenant, who sought to downsize from their previous headquarters while transitioning to a more modern work environment,” Leuchte explained.

The building’s space can be divided into up to three rental areas per floor, with options ranging from 400 square meters to the full floor size of approximately 1,300 square meters, making it a versatile option for future tenants.

Poland Would a reduction in interest rates and a drop in mortgage rates boost sales?

Would a reduction in interest rates and a fall in mortgage rates revive housing sales? How much of an impetus to purchase would cheaper standard loans without the Start-up Loan be? Could lower interest rates drive up housing sales

Zbigniew Juroszek, CEO of Atal:
There is no doubt that the high level of interest rates has a strong and negative impact on the situation in the real estate market. At present, mortgages in Poland are among the most expensive in Europe – the average interest rate on new commitments fluctuates around 8 per cent. This strongly reduces the demand for flats and the creditworthiness of buyers. Their situation is improved by the relatively high dynamics of wage growth, which, on the other hand, raises production costs, not without influence on the growth of housing prices.
The banks’ offer, with its high margins and predominance of fixed-interest products, does not encourage purchases either. Customers admit that as soon as there is an opportunity in the future to refinance a loan, move to a lower interest rate and fit into the cycle of rate reductions, they will gladly take advantage of such an option.

A gradual reduction of mortgage interest rates in Poland would make the discussion about state subsidies less relevant. This is because a standard offer would allow many families to realise their housing plans who, without subsidies, cannot now afford to take out a loan commitment. Also, given the proposed design of the subsidy scheme with its many restrictions, a rate cut would naturally exclude some potential beneficiaries.

Tomasz Kaleta, managing director of sales and marketing at Develia:
A reduction in interest rates and a drop in mortgage interest rates would certainly have a positive impact on the revival of housing sales, especially among customers who are currently hesitant to make a purchase decision. Lower interest rates could also indirectly influence the decisions of cash buyers for investment purposes. With interest rates on deposits and other low-risk financial instruments falling, investors are looking for alternative ways to invest capital, and real estate is often seen as a stable and attractive long-term investment.

In turn, lower interest rates on standard mortgages, without the support of the Start-up Loan scheme, could become a significant driver of demand. For many customers who do not qualify for government programmes, a cheaper loan could be a real incentive to decide to buy a home.

Agata Zambrzycka, sales and marketing director at Aurec Home:
Creditworthiness is definitely better than it was two years ago, but due to high interest rates, people earning the minimum wage still have to postpone the dream of buying their own property. Small interest rate cuts will not radically change this situation. Even a 1.75 pp drop in interest rates will not bring about a revolution in loan instalments. For example, for a 25-year loan of PLN 500,000, the instalment with a margin of 2.3 pp (the average for loans with variable interest rates) will drop from the current PLN 3,900 to around PLN 3,350. This is quite a difference, but borrowers in 2020-2021 were paying around PLN 2250 per month with the same terms.
It is worth noting that in the last three years, most of the newly granted loans had periodically fixed interest rates, so the rate cut will not affect the instalments of these commitments. In order to restore balance in the real estate market, long-term measures are needed, such as releasing land owned by state-owned companies for new development investments or streamlining administrative procedures.

Magdalena Gosk, Sales Leader BPI Real Estate Poland:
For many customers, cheaper credit is a key argument in the decision-making process of buying a property. Especially now, when the market is experiencing a prolonged decision-making process. The reduction in interest rates and the drop in mortgage interest rates is always an additional impulse for the revival of housing sales. Cheaper loans increase the creditworthiness of buyers by lowering monthly instalments, which could encourage people who, for financial reasons at least, have so far held back their decision to buy.

In the case of standard loans, on the other hand, without support programmes, a lower interest rate would be an important factor influencing the purchase decision. Most customers are looking for attractive financing terms. Cheaper loans would make the standard offer more competitive and could attract new buyers who previously did not qualify for more expensive loans.

Joanna Chojecka, sales and marketing director for Warsaw and Wrocław at Robyg Group:
We see positive trends in the market – lower inflation, funds from the EU and a stabilised economy allow us to assume that demand for flats will grow. Unfortunately, the supply is still low, there is a shortage of flats, especially in Warsaw, where the interest in purchase is the highest. This is the result of administrative procedures that are too slow and need to be definitely accelerated. Access to attractive housing finance for Poles is very important, but regardless of government programmes, we see that banks are preparing more and more interesting credit offers. Therefore, we are confident that the housing market will continue to grow and that the reduction of interest rates will have a slight impact on this growth.

Zuzanna Należyta, commercial director at Eco Classic:
At the moment, we are facing limited demand due to high interest rates. Many people simply do not have the opportunity to purchase a flat. The introduction of the programme in the announced form would certainly help especially those purchasing flats for their own needs. We estimate that the restrictions on the BK2% programme and the large supply will result in an upturn, but will not contribute to an increase in prices.

Marcin Michalec, CEO of Okam Capital:
A reduction in interest rates and thus an increase in creditworthiness would certainly allow some potential buyers to purchase flats. This, however, according to expert forecasts, may realistically happen only in 2025. At the same time, lower mortgage instalments could also encourage more people to purchase premises for investment purposes. Either of these forms, whether we are talking about government programmes of preferential loans for the first flat or cheaper mortgages – could have a positive impact on the recovery of the market.

Andrzej Gutowski, Sales Director of Ronson Development:
A reduction in interest rates and a drop in mortgage interest rates would certainly revive sales in the property market. The development market, including investment purchases, is strongly dependent on the level of interest rates. The years 2020 and 2021, when rates were at record lows, saw a lot of movement in real estate.
Even the mere announcement of a possible interest rate cut has a psychological impact. It can prompt buyers to make a decision. Cheaper loans, even without a ‘Start-up Loan,’ could become a significant impetus to buy for many potential customers.

Damian Tomasik, CEO of Alter Investment:
Currently, we have the most expensive loans in Europe and therefore, a reduction in interest rates and a decrease in mortgage interest rates would certainly boost sales. Mortgage loans are a key instrument for financing the purchase of real estate, and their preferential forms can significantly reduce the barrier to entry for many potential buyers.

Lower lending rates, without additional support programmes, could be a strong incentive, especially for those who were planning to buy but were holding back their decision in the face of high financing costs. It is worth noting that every percentage point, or even fraction thereof, of a reduction in mortgage interest rates significantly reduces the total cost of the loan in the long term, making the purchase of a property more attractive and cost-effective.

Source: dompress.pl
Photo: ROBYG, Royal Residence

EU inflation lows to 2.1% in September, Czech Republic Sees Increase

Inflation across European Union countries slowed to 2.1% in September, down from 2.4% in August, according to a report released today by the European statistics office, Eurostat. However, the Czech Republic bucked the trend, with inflation rising to 2.8% from 2.4% in August. The data, harmonized to fit the EU’s calculation methodology, differs from figures released by the Czech Statistical Office (ČSÚ).

In the eurozone, inflation also eased, falling to 1.7% in September from 2.2% in August. This was slightly lower than Eurostat’s initial flash estimate, which had placed inflation at 1.8%. On a month-on-month basis, prices fell by 0.1% across both the eurozone and the EU as a whole in September. In the Czech Republic, prices decreased by 0.5% compared to August.

Looking back a year, inflation was much higher. In September 2023, EU inflation stood at 4.9%, while the eurozone recorded 4.3%. The inflation rate in the Czech Republic was significantly higher at 8.3% at the same time last year.

Among EU nations, Ireland reported the lowest inflation in September at 0%, followed by Lithuania with 0.4%, and Slovenia and Italy at 0.7%. Conversely, Romania recorded the highest inflation at 4.8%, followed by Belgium with 4.3% and Poland at 4.2%.

Of the 27 EU countries, annual inflation dropped in 20, increased in five, and remained unchanged in two between August and September.

In the eurozone, services were the biggest driver of annual inflation, contributing 1.76 percentage points. This was followed by food, alcohol, and tobacco, which contributed 0.47 points, and non-energy industrial goods, which added 0.12 points. Energy, meanwhile, helped curb price growth with a negative contribution of -0.60 percentage points.

According to the ČSÚ, inflation in the Czech Republic reached 2.6% in September, compared to 2.2% in August. This increase was primarily driven by rising food and fuel prices, according to the office.

Source: Eurostat, ČSÚ and CTK

Ministry of Health projects CZK 11 bil. deficit in health insurance for 2024, aims recover in 2025

The Ministry of Health has announced that public health insurance is projected to run a deficit of CZK 11 billion this year, with total expenditures expected to reach CZK 502.6 billion. The Ministry plans to recover the shortfall in 2025, anticipating revenues of CZK 529.7 billion. However, only CZK 5 billion will be available for increases in healthcare reimbursements, according to Tomas Troch, Director of the Price Regulation and Reimbursement Department at the Ministry.

The proposed reimbursement decree for 2025, which outlines how healthcare funds will be distributed, has drawn criticism from some sectors of the healthcare industry. General practitioners (GPs) and outpatient specialists have expressed their dissatisfaction, threatening to close their clinics in protest by the end of October. Small hospitals are also considering a petition to the Constitutional Court. “We will continue negotiations with GPs and outpatient specialists in the coming days,” Troch said, emphasizing that the decree serves as a baseline and additional funds may be set aside by insurance companies.

The Ministry’s proposal to increase reimbursements by 3.3% year-on-year is backed by an April government resolution, which instructed the Ministry to ensure the public health insurance system remains balanced in 2025.

Troch explained that CZK 3 billion of this year’s deficit is attributed to an agreement with hospital doctors that led to salary increases, adding, “This is a mandated cost we must account for in 2025, not just for VZP, but for all health insurers.”

Next year, the state’s contribution for state-insured individuals is set to rise by just 2.7%. This increase is based on inflation and real wage growth over the past two years. As a result, total year-on-year revenues are expected to grow by CZK 27.4 billion. However, only CZK 5 billion will be allocated for growth in healthcare payments, representing an average increase of just 1.1%—the smallest in recent years.

The final version of the decree is scheduled to be published by the Ministry of Health at the end of October. The current proposal outlines the largest increase of 11.5% for center-based drugs, which include modern treatments for serious diseases that can only be prescribed by select medical centers. Aftercare services are set to increase by 11%, followed by prescription drugs (5.8%) and medical devices (5.5%). Among healthcare areas, physical therapy (5.4%) and outpatient specialists (4.6%) are seeing the most growth. General practitioners, many of whom are protesting the proposal, will see a more modest reimbursement increase of 2.8%.

Source: CTK

Moravian-Silesian region to demolish 72 buildings after devastating floods

Following the catastrophic floods that struck Moravia and Silesia in mid-September, authorities in the Moravian-Silesian Region have decided to demolish 72 buildings, including 37 family homes. Radim Kuchař, director of the Moravian-Silesian firefighters, announced the decision today, stating that the majority of the buildings set for demolition are located in the upper reaches of the Opava River in the Bruntál district. Hard-hit areas include the towns of Zátor, Široká Niva—where even the local cinema was destroyed—Brantice, Holčovice, Karlovice, and parts of Vrbno pod Pradědem.

In addition, six buildings in Nová Ves, Ostrava, will also be demolished. According to Kuchař, two dozen demolitions were carried out directly by firefighters, especially in cases where structures posed a threat to nearby buildings. The remaining demolitions were handled by private companies or homeowners themselves.

Larger towns were not spared from the destruction either. In Krnov, three buildings have been or will soon be torn down, including one owned by the town hall. “The city of Krnov has recorded its first municipally-owned building that was so severely damaged by the floods that demolition was necessary. The property on Minorite Square, formerly a pet shop, will be demolished. We are working to find alternative premises for the tenant,” said city spokeswoman Dita Círová.

Josef Bělica, Deputy Governor of the Moravian-Silesian Region, reported that nearly 400 soldiers with 98 pieces of equipment are still active in the region. In Holčovice, 121 properties remain without gas, including a senior home currently relying on gas supplied by tanker trucks. Gas services are expected to be restored to most of the affected homes by the end of October.

Electricity remains cut off in 31 houses in the region. Bělica noted that the electricity grid’s capacity is sufficient to allow residents to use electric heating if necessary. He also mentioned that energy provider CEZ has already replaced 3,000 water-damaged electricity meters, with more replacements underway.

Flood Damage Estimated at CZK 2.9 Billion

Meanwhile, state-owned enterprise Povodí Moravy (Morava River Basin) has estimated property damage caused by the September floods at CZK 2.9 billion. This figure is still being refined as assessments continue. The Šumperk region was hit hardest, with damage estimates reaching CZK 2 billion. Key rivers affected include the Branná, Krupá, Desná, Morava, Merta, and Mírovka, according to Jana Kučerová, head of external relations at Povodí Moravy.

“The floodwaters severely damaged the banks and infrastructure of these rivers, including retaining walls, flood protection dams, and various structures within the river channels such as steps and weirs,” Kučerová said. “In many places, significant deposits of debris need to be cleared, and bank collapses must be repaired.”

Reconstruction efforts to repair the damage are expected to take significant time and resources, with the total cost of repairs still to be confirmed.

Source: CTK
Image: Google maps

Industry leaders weigh in on ECB’s interest rate decision

The European Central Bank’s (ECB) anticipated interest rate decision has drawn reactions from key players in the real estate and finance sectors. As the ECB opted for a widely expected 25 basis point cut, industry leaders weighed in on the potential implications for the economy and real estate market.

Peter Axmann, Head of Real Estate Clients, Hamburg Commercial Bank, highlighted that the decision had already been factored into current interest rate levels for long-term maturities. “Given the decline in inflation to below the critical two percent mark, today’s move was no surprise,” he stated. “With an inverted yield curve in play, we do not anticipate any drastic reduction in long-term rates, although a slight decline of up to 0.25 percentage points by year-end remains possible.”

Prof. Dr. Felix Schindler, Head of Research & Strategy at HIH Invest, echoed similar sentiments, noting that the ECB’s rate cut reflects the slowing inflationary pressures and a weak economic environment. “The focus will likely remain on core inflation, which remains high,” Schindler said. “The cut aids in normalising the yield curve and reduces variable financing costs, which should help provide a boost to the real estate markets. Long-term capital market yields have already dropped significantly, offering additional support for real estate investments.”

Francesco Fedele, CEO of BF.direkt AG, expressed cautious optimism about the decision, stressing that while the ECB has often been criticized for delayed reactions, it’s better to be late than early when combating inflation. “A premature rate cut could undermine market confidence in the ECB’s commitment to controlling inflation, potentially driving long-term interest rates upward,” Fedele warned. “For the real estate sector, particularly concerning ten-year financing, market confidence in the ECB’s inflation strategy is crucial.”

Sascha Nöske, Chairman of the Board at STRATEGIS AG, pointed out that the real estate transaction market has been facing challenges due to a disconnect between supply and demand prices. “Interest rates play a vital role in bridging this gap,” Nöske remarked. “The ECB’s latest rate cut is a key step towards revitalizing the residential property market, particularly benefiting private homebuyers.”

As the ECB moves to manage inflation while promoting economic growth, the real estate sector will likely be closely watching how these rate changes play out in the coming months.

New Polish planning act brings major changes to spatial planning and the real estate market

The real estate market in Poland is set for significant shifts following the enactment of the new Planning Act on 24 September 2023. This legislation, aimed at streamlining and standardising spatial planning processes, will have a direct impact on developers, investors, and local governments, particularly affecting industrial project investments. The new law seeks to enhance transparency, shorten procedures, and align spatial plans with real development needs, while also introducing fresh challenges and restrictions. Jacek Szkuta, Director of the Land Department at AXI IMMO, sheds light on what the market can expect as these changes take full effect by 2026.

Current Issues in Spatial Planning

The existing spatial planning system is primarily governed by three documents: provincial spatial development plans, municipal development studies, and local spatial plans. However, the lack of legal standing for development studies allowed for land development condition (LDC) decisions that often contradicted long-term strategies, leading to urban chaos. As a result, municipalities have struggled with disorganised development, particularly in cases where non-industrial areas were used for industrial projects.

New Rules: General Plans

Under the new law, general plans will replace the current condition studies, bringing more precision and accessibility to planning processes. Municipalities that currently lack comprehensive local master plans must adopt them by 1 January 2026. These plans will dictate local development and zoning decisions, limiting the flexibility seen in previous years. Existing local development plans will remain in force until they expire.

“Local general plans will define planning zones with clear parameters such as development intensity, building height, and biologically active areas,” explains Jacek Szkuta. “This will reduce the possibility of arbitrary interpretations by officials and impose a five-year validity period on LDCs, curbing land speculation and pushing for quicker project execution.”

Development Addition Zones: A New Approach

A key feature of the new law is the introduction of development addition zones, designed to encourage infill development in existing built-up areas. Each municipality will be required to establish such zones based on urban studies, allowing for a variety of functions, from residential to industrial uses. For the industrial sector, this marks a significant change, as LDCs outside these designated zones will be restricted.

Exceptions to this rule will allow for some flexibility in reconstructing or expanding existing buildings. Moreover, LDCs issued before the law comes into force will not be subject to the new five-year expiration rule.

Integrated Investment Plan: A New Tool for Investors

While the new regulations introduce stricter zoning rules, they also offer tools to facilitate investment projects. The integrated investment plan (IIP) allows investors to negotiate project conditions with municipalities, provided the projects align with general plans. This new mechanism replaces the previous “Lex Developer” law and applies to all types of investments, not just residential.

“The integrated investment plan enables faster project implementation through cooperation with municipalities, with investors covering infrastructure costs,” says Szkuta. “This law encourages better space management and long-term strategic planning, but also requires flexibility from investors and effective management from municipalities.”

Impact on the Industrial Investment Market

The new regulations offer both opportunities and challenges for the industrial real estate sector. On the one hand, greater transparency and predictability will benefit investors, providing clearer guidelines and potentially reducing wait times for planning permissions. On the other hand, limiting land development outside designated zones could shrink the pool of available land, driving up competition and prices in key locations.

For those opting to use the IIP, there is an opportunity to develop more complex projects in areas not traditionally earmarked for industrial use, provided they can meet infrastructure requirements.

“The 2023 Planning Act introduces reforms that will improve investment predictability and streamline spatial planning,” concludes Szkuta. “While the changes present opportunities for increased transparency and administrative efficiency, they will also challenge the market by limiting available land for new projects, particularly in the industrial sector.”

Source: AXI IMMO

Czechs increase investments in funds as NEMO fund reaches 11,000 investors

Investments in funds across the Czech Republic are seeing substantial growth. Data from the Capital Market Association (AKAT) indicates that the volume of assets in collective investment funds surged by CZK 46 billion in the second quarter of 2024. As of 30 June, Czech investments in these funds totaled CZK 1.064 trillion, with individual investors holding 89% of the volume. Real estate funds, in particular, have shown a strong upward trend, with assets increasing by CZK 2.6 billion in the same period. Among the standout performers is the NEMO real estate fund, founded by the investment group Českomoravská Nemovitostní, which focuses on office properties in Prague. Over the past 12 months, NEMO achieved a 6.38% return as of 30 September 2024.

The rising interest in fund investments, especially in real estate, is clearly reflected in NEMO’s success. “The growing confidence in NEMO is demonstrated by the increasing number of investors. The fund recently surpassed 11,000 investors, a significant milestone for us,” said Josef Eim, Vice-Chairman of the Board at Českomoravská Nemovitostní. NEMO aims to continue offering attractive investment opportunities for clients seeking reliable and profitable ways to grow their funds. “The popularity of dependable investment funds has steadily increased in recent years, as shown by the data from the Capital Market Association,” added Eim.

AKAT Chairman Jaromír Sladkovský also commented on the broader trends in the investment landscape. “In the second quarter of this year, the strong asset growth trend that began in 2023 persisted. We expect further interest rate cuts across key markets to sustain this growth. The recent sharp declines followed by a rapid recovery demonstrate investors’ confidence in the economy’s stability and growth potential,” said Sladkovský. The markets are currently factoring in a potential 100 basis point rate cut from the Czech National Bank over the next two years, which could further boost economic activity in the real estate sector.

The NEMO fund, which celebrated its five-year anniversary in June 2024, has become a prominent player in the Czech real estate investment market. Over this period, the fund has accumulated a significant portfolio, including properties such as the Apeiron office building, Corso Karlín, and the Aragonit office building. The value of assets under NEMO’s management now exceeds CZK 2.6 billion, and the fund plans to expand its portfolio of Prague office properties by the end of 2024.

Poland’s retail parks see record high growth in new projects

The retail park market in Poland is experiencing unprecedented growth, with new projects reaching record highs, according to a recent report titled Retail Parks and Convenience Developments, prepared by Avison Young in collaboration with the Polish Council of Shopping Centres (PRCH). Contributions from legal and financial experts at Squire Patton Boggs and the Polish Sustainable Development Forum (POLSIF) also highlight the expansion.

Retail parks in Poland trace their origins back to the political changes of the 1990s, with the first developments appearing at the end of that decade. These early retail parks were strategically located on the outskirts of major cities, forming the foundations of Poland’s modern retail landscape. By 2019, the sector had grown to encompass 1.5 million square meters of gross leasable area (GLA) in parks over 5,000 sq m.

The COVID-19 pandemic marked a turning point for retail parks, as their design—featuring units with direct parking access and no shared common spaces—allowed them to remain operational under strict health measures. This shift in consumer preferences and investor perceptions catalyzed rapid sector growth, with supply increasing by 1.1 million sq m between 2020 and 2023, and an additional 180,000 sq m completed in the first half of 2024. Another 300,000 sq m is expected by the end of 2024, with a record 500,000 sq m projected for completion in 2025.

Since 2020, the development of retail parks has accelerated, with over 70% of new projects falling between 5,000 and 10,000 sq m. Investors have primarily focused on smaller towns with populations under 50,000, where modern retail offerings remain scarce. Out of more than 100 new parks, 68 have been developed in these smaller municipalities. Larger parks, ranging from 10,000 to 20,000 sq m, accounted for 32% of new supply, while 15% of the space was contributed by eight projects ranging from 20,000 to 40,000 sq m.

Currently, there are 260 large retail parks in Poland, collectively offering 2.9 million sq m of GLA. This format now represents 18% of modern retail space in Poland, up from 9% in 2010. Over 80% of ongoing construction in the retail sector is dedicated to retail parks, underscoring their growing importance.

In 2024, larger retail parks are gaining momentum, with 35 parks above 5,000 sq m under development, 13 of which exceed 10,000 sq m. The largest project under construction is PH Osada in Żyrardów, covering 33,000 sq m. These larger parks now account for 57% of the retail space under construction, reflecting a trend toward building larger, more comprehensive retail destinations.

Retail parks have emerged as an appealing alternative to traditional shopping centres, offering tenants lower operating costs and access to previously untapped markets. The sector has attracted a wide range of tenants, from budget fashion brands to service providers like gyms, playgrounds, and childcare facilities, further diversifying the tenant mix.

Smaller retail parks and convenience centres, ranging from 2,000 to 5,000 sq m, are also expanding rapidly. With 1.1 million sq m of GLA in Poland, these formats are becoming increasingly popular, particularly in towns with populations between 10,000 and 50,000. The convenience model is gaining traction in larger cities as well, aligning with the “15-minute city” concept, which prioritizes access to basic services within a short distance.

Investor interest in retail parks and convenience centres remains high, with many viewing them as stable, long-term investments with attractive WAULT (Weighted Average Unexpired Lease Term) periods. The dynamic growth in both large and small retail parks reflects their strong performance and increasing role in Poland’s modern retail landscape.

Photo: Paulina Brzeszkiewicz-Kuczyńska, Research and Data Manager at Avison Young

Study finds Czechs renting smaller apartments for the same price as in 2019

The ongoing economic challenges in the Czech Republic are having a noticeable impact on the rental housing market. According to a survey by Generali Investments, tenants today are renting significantly smaller apartments compared to 2019, despite paying the same amount. On average, Czechs now rent apartments that are 16 square meters smaller for the same price.

This shift in rental affordability comes as rising energy costs, inflation, and high interest rates put increasing pressure on household budgets. While there have been signs of economic stabilization, over a quarter of Czechs continue to cut back on their housing expenses, the survey revealed.

Czechs Cutting Back on Housing

The survey, conducted by Generali Investments CEE in September, highlights that 25% of Czechs are reducing their housing demands due to the ongoing economic strain. Factors such as energy prices, inflation, and interest rates remain elevated compared to pre-pandemic levels.

“Although the economic situation in the Czech Republic has improved slightly compared to previous years, we are still far from pre-COVID levels. However, it is worth noting that fewer people are reducing their housing demands this year compared to last,” said Marek Bečička, Director of Real Assets at Generali Investments CEE.

Rental Market Downsize: 2019 vs. 2024

The deterioration in the rental market is clear. In 2019, tenants in Prague could rent a 65-square-meter apartment for CZK 20,000. Today, for the same amount, renters can only secure a 49-square-meter apartment. This represents a 16-square-meter reduction in living space, according to data from the Czech Statistical Office and Deloitte.

The survey’s findings reflect a broader trend of shrinking apartment sizes as the economic squeeze continues to impact Czech consumers, especially in major cities like Prague. While the situation has shown some signs of improvement, many households remain under pressure, forced to make sacrifices in their living arrangements to cope with rising costs.

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