How much will apartments in Brno cost and how will the gradual interest rates cuts affect the South Moravian real estate market? Investors, architects, and representatives of real estate funds discussed this and other trends in real estate and construction at the Real Estate Forum, which we, together with HAVEL & PARTNERS, organized for the fifth time in Brno in the autumn of 2023. To this largest real estate conference in the South Moravian region, we also added the first meeting of experts in Slovakia. The topic of the first year of the Slovak Real Estate Vision & Trends conference, which we organised last November in cooperation with CBRE in Bratislava, was rental housing and its future in Slovakia.
Optimistic voices that in 2024 and 2025 we could see interest rate cuts and cheaper mortgages resonated at the Real Estate Forum conference held in the Passage Hotel in Brno. After last year’s drop in demand, when prices of new Brno apartments temporarily fell below CZK 100,000 per square metre, the South Moravian real estate market could see a recovery. “Demand recovered over last summer and there are already the first signs that people are looking ahead over the horizon, expecting interest rates to fall. Investors are waking up and demand is growing,” said Prokop Svoboda, owner of Svoboda & Williams, summing up the situation.
Sustainability of buildings is also a hot topic for developers, investors, and tenants. This is due to the pressure to reduce the carbon footprint in light of European legislation and tightening regulations for the energy performance of buildings. “They will require new buildings to be emission-free from a certain date in terms of greenhouse gas emissions and existing buildings to be converted to a higher energy standard at the same time,” explained Petr Opluštil, partner at HAVEL & PARTNERS.
The first annual real estate conference, Real Estate Vision & Trends 2023, was also held in Slovakia in November 2023. The Grand Hotel River Park in Bratislava hosted a meeting of experts from among representatives of major development, construction and investment companies, real estate funds, representatives of the public sphere as well as from the field of law and consulting firms.
The key point of the conference was the topic of rental housing. In Slovakia, in connection with the approval of the Act on State Support for Rental Housing, the State declared that it would build at least 10,000 rental apartments over the next five years with the help of the private sector. This is to improve housing affordability. The support from the State is to consist mainly in a reduced 5% VAT rate applied to the construction of rental apartment buildings under this system. This is to make such construction cheaper.
“However, the Slovak Republic still has to obtain the European Commission’s opinion that the system of state tax support for the construction of rental apartments by the private sector does not constitute unlawful state aid contrary to EU law – this is a condition precedent of the investment agreements concluded,” pointed out Ondřej Majer, partner at HAVEL & PARTNERS.
However, Majer believes that an essential way to address the lack of affordable housing would be to support commercial rental housing outside the framework of state regulation. However, Tomáš Hegedűš, CEO of CBRE, has high expectations from the approved legislation on state-supported rental housing. According to him, this has the potential to attract billions of euros in investment, thereby significantly increasing housing affordability in the country. “Investors have already announced that they have more than 2,500 apartments in the pipeline or currently under construction that are dedicated to this purpose and could reach their tenants within the next few years,” Hegedűš said.
