Real estate spiral in Brno prices climbing upwards

New apartments in Brno are becoming more expensive than in Prague. Their prices have doubled in the Moravian capital in the last five years. Developers, architects, investors and representatives of real estate funds and consulting firms discussed the reasons for this and how the market situation in the South Moravian region will continue to develop at the Real Estate Forum 2021, organised by HAVEL & PARTNERS in Brno.

“In the last five years, prices have doubled in Brno, while in Prague it took ten years,” said Marcel Soural, founder and owner of Trigema. Prices were rising even during the pandemic. People were motivated to buy real estate by cheap mortgages. “The interest in residential real estate was driven by the need to secure oneself and take advantage of incredibly cheap money,” confirmed Prokop Svoboda of the real estate agency Svoboda & Williams.

Moreover, there is a shortage of real estate in the region and demand is still exceeding supply. As in the rest of the country, new construction is held up by lengthy permitting processes, and in Brno investors are also waiting for the approval of a new zoning plan.

Experts are trying to find the answer to the question of when the interest will subside, and the steep price growth will stop. “Since there are few apartments, the interest will continue. This is also evidenced by funds that are focused on residential construction – they are noticing high demand,” said Robert Robek, investment director at AVANT investiční společnost.

However, inflation, which is around 5%, could have a say in real estate prices in the coming months. The question is whether it will not impede prices itself and determine where the ceiling actually is. “We are far from it,” argued Tomáš Vavřík, founder of development company DOMOPLAN. “Demand is still unsatisfied and until construction processes are activated, which will not be before five years, growth will continue,” he added.

The new Building Act was supposed to help speed up the permitting process for structures. According to František Korbel of HAVEL & PARTNERS, co-author of the government draft law, the new regulation simplifies the permitting process. “It's one procedure, one stamp, one process.” However, he expressed concern over whether the new law will even be put into practice after the elections.

Marcel Soural (with microphone) and to his left Robert Robek

From homes to offices and from own housing to rental

Experts predict that a strong rental market will emerge as a result of the current situation. More and more people will not be able to afford their own housing, so renting will be the solution. And during the pandemic, the office space market has also had to cope with significant changes. Brno is specific in this segment; the local office space market focuses on shared service centres. These are companies that needed large offices before the pandemic and are now dealing with how to bring people back from home offices or how well the combination of home and office work will work.

“Even if the plan is to reduce the number of people in offices, it does not necessarily mean a reduction in the number of square metres of leasable area,” said Lukáš Netolický of Cushman & Wakefield. Both tenants and landlords are trying to create as nice a space as possible to lure people back to the offices. This creates various informal zones, spaces for sports, relaxation places. Developers who want to succeed on the market must respond to this new trend and increasingly offer more flexible office models, which have also been in great demand in recent months.

Real Estate Forum 2021

The idea of organizing a Real Estate Forum focused on selected trends in the real estate market, current and specific projects and real estate topics in Brno and the South Moravian region originated three years ago at the law firm HAVEL & PARTNERS, which invited other important partners to co-organize it. Thanks to the exceptional composition of partners and speakers, the environment, organisation and media coverage, the forum has become the largest and most significant real estate event in Moravia.

On stage from left: Viktor Poledník (Department of Land Use Planning and Development of the Municipality of Brno), Marek Vinter (Association of Brno Architects and Builders), Jiří Václavek (presenter)

From left: Viktor Poledník (Department of Land Use Planning and Development of the Municipality of Brno), Marek Vinter (Association of Brno Architects and Builders), Jiří Václavek (presenter), Jan Kasl (Czech Chamber of Architects), František Korbel (HAVEL & PARTNERS)

Robert Robek (AVANT investiční společnost)

From left: Milan Kratina (Accolade), Prokop Svoboda (SVOBODA & WILLIAMS), Petr Hromádka (Henceforth)

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