Situated in central Europe, the Czech Republic (formerly known as Czechoslovakia prior to the break up) is land locked by Poland, Germany, Austria and Slovakia. While the country covers some 78,000 km2, it only has a population of just over 10 million. Over the last 20 years the country has been at the centre of much infighting and politician upheaval, but the situation seems to be more under control these days, and the economy is has been fairly up beat since the last recession which ended in 1999.

Introduction To The Czech Republic

While there are still many signs of the old communist regime, the country has been a member of the European Union since 2004, and also has membership of NATO. A move to a democracy was a major pre-condition to EU membership, as was the loosening of rules against foreign investment. These changes have, and continue to, impact upon the improving standard of living of the population of the Czech Republic.

While the Czech landscape is dominated by a number of rivers which cover the country, the terrain itself is very varied with mountainous and flat areas throughout the land. The capital Prague is obviously the most well recognised of cities in the Czech Republic, but the mixture of cultures and different eras in the country’s history offer a great back drop to what is perhaps one of the most beautiful countries in Europe.
Only just really beginning to emerge from the problems of the past, the Czech Republic has much to offer both in terms of investment potential and culture.

Property Market in The Czech Republic

Prior to the Czech Republic joining the EU there were concerns that the market may well experience a short term spike, which would be unsustainable - fortunately this did not happen.  Instead the market saw a repositioning ahead of EU entry, and after membership was confirmed rather than open the flood gates, the market saw a constant flow of long term investment, which ensured “hot spots” and “bubbles” where kept to a minimum.

The city of Prague has been a major reason for the increase in the number of tourists and investors into the Czech Republic, with its great culture, beautiful architecture and welcoming atmosphere.  There has also been an increase in the demand for property from Czech nationals, who have seen a major increase in their incomes over the last decade.  This together with the steady flow of investment from other areas of Europe has created not only a firm property market, but a market which has created very good investment returns.

The difficulty for the authorities is keeping the beauty and culture which has attracted so many investors and tourists, as well as adapting new builds and new developments to take in modern day services.  So far they have been very successful in this area, and seem to understand the need to retain a mix of the many different elements of the country.

An interesting market which has, and continues to show good potential for the future.  Rather than a boom and bust property market, it seems to be more steady than many of the other smaller markets in Europe.

Buying Property

Before even considering buying a property in the Czech Republic it is vital that you check what is called the Cadastral Register.  This is the register which contains all properties in the country and details required to ensure any purchase can go through - basically if a property you are interested in is not on the register then you will not be able to buy it.  There have been many occasions where flats have been put up for sale, but the flats have not been registered separately - instead the whole building has been registered - and purchases have been stopped.  This must be your first port of call before you even consider buying any property in the country.

Prior to the country’s entry to the EU, any foreign investment had to be carried out through a registered company with individual foreign ownership not permitted.  Since joining the EU, all European counterparts are treat as one and individual property ownership for “non-nationals” is now permitted.  However, the property purchase process in the Czech Republic is far from straight forward and it is essential that you employ local agents and lawyers to act on your behalf as any errors can be very costly, and cause significant delays. 

It has been estimated that costs associated with the purchase of property will be in the region of 8% of the purchase price.  You should also be aware that until all of the necessary paperwork has been lodged with the Land Registry office you will not be the legal owner of any property.
 

Future Property Market

The property market in the Czech Republic is fairly unique among some of the smaller members of the EU in that as well an active foreign investment market, there is also enough domestic demand to maintain current levels.  Some market experts estimate that the country requires at least 50,000 extra homes to fulfil the current demand, and this is only set to grow as more and more tourists and expats are attracted to the area.

The economy has also turned around after much trouble in the 1990’s and is forecast to remain on a steady upward path for the foreseeable future.  This is one of the most vital elements to the success of any property market, and offers a backbone for future investments.    After years of doom and gloom, the feel good factor has returned to the country, and changed the lives of the Czech population.

While the whole country seems to be attracting an increasing number of tourists, Prague in particular has become a “hot spot” for foreign visitors, with budget airlines offering direct flights to the capital.  The natural beauty and differing cultures of the country are proving a great magnet, and the authorities have made good use of this.

If you are looking for a quick profit then the Czech Republic may not be for you, however if you are looking for a solid long term investment then you should take a closer look.