Prague is the overseas city where everyone feels like at home

Prague is the overseas city where everyone feels like at home

Czech Republic is a small European country, one of those we call "average", "typical" and "classical". It would seem that it can't surprise or impress buyers and investors. Prague, of course, is a city of great beauty, which is always full of tourists, but apartments there are not the cheapest in Europe, and the ownership is not enough for obtaining a residence permit.

Upon closer examination, all these shortcomings turn out to the positive aspects.Undoubtedly, the real estate in the Czech Republic is more expensive than, let say, in the Baltic States or Bulgaria. But it indicates the quality and the constant demand. It is no coincidence that every third buyer of new homes and apartments in the Czech Republic is a foreigner.Nevertheless, Czech Republic does not allow you to receive the residence permit automatically when buying real estate, since its economy is all right, and the authorities do not want to transform the country into a large interchange station for wealthy foreign, especially Asian, travelers.

But this does not actually mean that the purchase of the real estate in the Czech Republic does not give you anything. On the contrary, it is an excellent option for education, work or well-deserved rest; moreover it is a good investment and an important step to obtaining a residence permit. In order to learn why you should buy the real estate in the Czech Republic, we have talked with Natalia Klyap, the Director of real estate agency DůmProspekt, and also with Irina Mikhalchuk, the manager of the agency. The company exists since 2009 and more likely specializes in the real estate markets in Prague and Karlovy Vary.

Prague is inexpensive, Prague is luxurious

- Tell us please, what kind of property is in demand in Prague. What areas of the city that we should pay attention to?

- There are many good districts: Old Town, New Town, Vinohrady, Zizkov, Prague 6 are among them... Students, accomplished people and families live in the city center. On the outskirts of the capital, where more greenery predominates in the area, young families live, who often buy houses in the suburbs of Prague. They work in Prague, but live outside the city.

There are many families from Russia and Ukraine in the capital of the Czech Republic. They mostly live in the district Prague 5, where the cooperative houses are located. Previously it was necessary to establish a company or join a cooperative in order to purchase the property. Those people, who had chosen cooperatives, precisely settled in the district Prague 5. This is a Russian enclave, where you can easily find Russian shops, hairdressers and everything you need for life.

- What districts of Prague are the most expensive, and which are the cheapest?

- The most expensive apartments in Prague are in the Old Town and Vinohrady. In Prague 1, Old Town and the diplomatic district a square meter costs €5,000. There are residences with terraces, overlooking the magnificent view of Prague, which worth approximately €8,000 per sq.m. On the Paris Street andin the Old Town as well apartments in renovated buildings are usually sold at €9,000 per sq.m.

Cheapest areas are sleeping quarters located in Prague 9, part of Prague 5, 8 and 10 (depending on the distance to the city center). There you can buy a square meter even for €1,000 in the panel house, often without repair.

The crisis had passed, and prices are going up

- How has the crisis affected the market?

- Prices have dropped, there were problems with mortgage loans. Currently everything is behind us, the market is stable, and thedemand has already recovered. Crisis has hit the new buildings of economy class, they veritably decreased in price. Real estate prices remained stable in historic brick buildings of Prague, and even during the crisis, they did not come down in price.

- What will happen with the prices in future, according to your expectations?

- Prices for apartments in Prague will increase because the market has already passed the period of the greatest decline.

Foreigners in the Czech Republic are treated as if they were the Czechs

- How recently are things going with demand from the CIS countries?

- Russian speaking customers currently invest more, they acquire profitable houses, tend to purchase commercial real estate in the Czech Republic, shops which they either resell or rent out.

If we are talking about the purchase for living, it is quite common when parents buy apartments for their children - students or young professionals. In case when life plans of those children change later, they just resell the apartments or rent them out.

Also there are many married couples among our clients, who move to the Czech Republic for the permanent residence, or who buy holiday apartments. Demand is mainly concentrated on the apartments which cost €100-200 thousands and that are closer to the city center. Profitable houses in Prague are usually sought for the cost from €1 million.

- Are there any restrictions on the sale of real estate for non-residents?

- There are no any of them. In 2009, all the restrictions on the purchase of real estate by foreigners were canceled. In order to purchase the property,your desire, valid passport and the necessary amount of moneywill be quite enough. The timing depends on the conditions of each individual client, but generally it takes one or two weeks. Our agency also implemented the transactions within three business days.

Procedure of purchase without preliminary reservation is usually following: firstly, tripartite agreement between the bank or attorney, the seller and the buyer is signed, then the money is transferred to the escrow account in a bank either to the account of a notary, then the purchase-and-sale contract will be signed and the documents for registrationare applied. After obtainment of the statement from the cadaster of real estate, where the buyer is already registered as the owner, the funds are transferred from the account of a notary to the seller’s account.

Here is very important to cooperate with reliable and trusted real estate agency, which will follow up the observance of all legal nuances and ensure that the process of the purchase was very precise, so that the seller has received full payment only after all obligations were fulfilled towards the buyer. Foreigners,who purchase the property in the Czech Republic, often do not know about such a possibility, and some retailers are more interested in quick obtaining of money than in bringing the deal to the end with all the necessary procedures and formalities.

Financial transactions, connected with the process of buying property, will considerably simplify the opening of the current account in the Czech bank. Personal presence and the presence of two documents, such as international passport and another identity document (driver's license, etc.) will be perfectly enough. Please take an interest about the peculiarities of opening a bank account abroad, even when you are still in your own country, because some CIS countries require registration of bank accounts in the tax office at the place of permanent residence. This can slow down the process of the purchase a little bit.

- What are the additional expenses when buying the real estate?

- Commission agencies when buying an apartment in the Czech Republic are usually 3% of the transaction amount. Thetax on the real estate transaction is regularly paid by the seller. Annual property tax depends on the location and the size of the apartment. The annual property tax on the average statistical apartment with an area of about 50 sq.m will be approximately €40.

The residence permit is possible within the presence of desire

- How difficult is the process of obtaining a residence permit in the Czech Republic?

- To obtain a residence permit in the Czech Republic you need to define the purpose of the stay. This can be your study, work, family reunion or business. It should be emphasized that to obtain a residence permit, particularly for the purpose of the entrepreneurial activity, the need for precisely personal presence in the country is actually required to be proved. At the competent approach, organization and observance of all necessary formalities, the obtaining of a residence permit in the Czech Republic is quite really.

After 5 years of permanent residence in the Czech Republic on the basis of a residence permit documents for permanent residence can be obtained. Students’ every year of the stay is counted as 6 months.

To obtain a student visa and a residence permit in the Czech Republic, they would require a certificate of enrollment of the student in an accredited institution, also the place of residence availability certificate in the Czech Republic (for example, the certificate from the landlord or the apartment owner), and the evidence of funds availability to reside in the country in the amount of €4,000 per year as well.

Bridge in Prague

- Are there any plans to give a residence permit to those people who make investments?

- Czech Republic is not like the Baltic countries. Here, the economy of the country is veritably advanced and that is why there is no need to distribute the residence permit to everyone.

In the queue for the purchase of commercial premises

- What kind of commercial real estate is there in addition to profitable houses?

- Hotels arefairly common, which were bought by foreign investors in 1990, mostly Italians had purchased them, and currently theyresell those hotels as a ready business. Customers tend to buy shops and offices as well. There is high demand for the stores in the Old Town. But the owners are in no hurry to sell a well-functioning business. In the city center there is a famous Paris Street, where the fashionable shops are located. Property prices are quite highhere, the demand for premises is stable enough; moreover it is far exceeding the supply. Acquisition of premises in the area attracts both local and foreign investors, who often wait a long time for the supply of the sale or the lease of real property. Such an expectation may take even years.

- Does everyone stand in the same "queue" - both local and foreign investors?

- That's right, authorities do not do anyd ifferences. Meanwhile the prices for the commercial real estate in Prague have increased significantly. Prior this period,a square meter in the city center was sold for €3,000, and currently it is sold for €5,000-6,000. And the existing business is most commonly transmitted by the transfer of the lease. Offices in Prague are usually rented out. Apartment houses are often formed as follows: commercial premises are on the ground floor, and residential space is on the remaining floors.

Tram in Prague

- What advices would you give to the buyers of real estate in Prague? Is there anything they should beware?

- When buying a property it is strongly suggested to apply to the reliable and proven agency that will help to implement a deal and will accompany the client at all its stages. Good realtor will intelligently receive a request, will update all the important details and wishes of the client, if necessary, and will explain all the pros and cons of the area and the location. Very often the clients, who came for the purpose of the apartment purchase is in the center of Prague 1, after a conversation with a realtor and the views of real estate, understood that they would feel better in Prague 3 or Prague 8, which are quite close to the center, but at the same time away from the crowds of tourists.

The optimal variant of propertyis also discussed on this step. Cooperative apartments in the Czech Republic have been quite popular among the local populationin the past. Such apartments are attractive in their price, but when buying an apartment in a cooperative building, the buyer does notreceive the property, but the client obtains a share in the cooperative. Such ownership is probably suitable for someone, but foreigners still prefer the most reliable option –the private property.

Hereinafter a good realtor will make a selection of the apartments, which will satisfy the criteria of the customer, and will follow up the legally correct execution of all necessary documents from the signing of the contract and prior to the transfer of the apartmentto the new owner.

Interview: Pavel Kuznetsov,