What's new on the real estate market? Look at the world of exclusive properties through the lens of an experienced broker

Luxent - Exclusive Properties offers comprehensive services in the field of luxury real estate. To work in such a specific market, our real estate brokers require, in addition to years of experience, excellent knowledge of the real estate segment, top know-how in marketing and sales support, as well as professionalism and superior client care. An exceptional example is Zdeněk Jemelík, who specialises primarily in the sale of residential properties and development projects and also provides advice on investment acquisitions and leases.

You started to focus on real estate during your studies at the University of Economics in Prague, when you chose real estate investment as the topic of your diploma thesis. What specifically did you deal with and what led you to it?

My thesis focused on real estate investment as a passive income option. Among other things, I compared long-term and short-term rentals in Prague through the Airbnb platform in terms of profitability and the intended location. There were several comparative criteria, and in retrospect, I neglected to include one important external factor that can and has influenced everything - the pandemic we are fighting here today. Back then, the situation was completely different, Airbnb was booming, it was in its infancy, and the revenue from short-term rentals became a big attraction for owners. Moreover, Prague was one of the most visited cities in Europe.

Why did you then decide to work as a real estate agent? And why Luxent - Exclusive Properties?

While studying at university, I worked in a corporation. However, I found that working all day at a desk in an office just wasn't quite for me. I prefer to spend the day "in the field" if possible, where the work is more varied in terms of meetings, viewings and recruitment. Every day is different and you meet interesting people. Truthfully, I never thought I would be a real estate agent. I didn't go to college for that (laughs). Moreover, historically the profession has not had a completely ideal name in our country, and I have encountered prejudice. However, I enjoy the phenomenon of real estate and towards the end of my studies I became more and more interested in working in this segment. In addition, during this period we realized a complete renovation of an apartment on our own. When I subsequently met the owner of Luxent, Emil Kasarda, I decided to take up this job almost immediately. We really hit it off, and we have a great team in the company.

Real estate agency Luxent - Exclusive Properties specializes in exclusive properties. What is the current interest in buying them? And what makes them different?

I still see a great demand for exclusive properties. In general, people have a lot of spare cash (nowadays they have the most money in their bank accounts in the last few years) and real estate is one of the ways to protect their savings from inflation and diversify their investment portfolio.

When it comes to exclusive properties, they must first and foremost be located in a perfect and sought-after location that will maintain the price level in the future in the event of various economic fluctuations and increase in value in the longer term. Another factor is, of course, the high standard of the property in question, but you can influence and adjust it according to your needs. You cannot change the location.

Photo: promenade in MOLO Lipno project

The past year has been associated with the coronavirus pandemic, which has affected many sectors. Has it affected the luxury property market? For example, what impact has it had on prices or selling times?

Overall, I consider the real estate market to be a segment that has not been significantly affected by the pandemic, especially in terms of prices. Demand still highly exceeds supply. At the beginning of the pandemic, there was uncertainty on the market, which may have been reflected in longer sales times for premium, or more expensive, properties, which is not unusual for this type of property. Buyers were waiting, making big investments and waiting to see if someone would run into economic problems and have to sell quickly and at a lower price. However, this did not happen in the vast majority of cases; on the contrary, sellers did not panic and kept prices high.

The annual lockdown period is certainly associated with a change in the preferences of those interested in new housing. Who are your most frequent clients at the moment? For example, have you registered an increased interest in houses with gardens or at least flats with terraces/balconies? Or are the outskirts of cities in close proximity to nature coming to the fore?

Currently, our most frequent clients are Czechs. Overall, we have seen a decreasing share of foreign buyers over the last few years, mainly due to economic and geopolitical reasons. In recent years, we can see an outflow of foreign capital in residential transactions, especially from Eastern countries (or former Soviet bloc countries). At the same time, Czechs are becoming more "rich" and their share on the buyer side is increasing.

 As far as houses with gardens and flats with terraces or balconies are concerned, they are clearly the most popular. However, it must be assessed whether the buyer is addressing his own housing needs or whether he is buying the property as an investment. When buying for one's own home, we place more emphasis on comfort and a garden or terrace is one of the main requirements.

 If we talk about the increased demand for the outskirts of the city, then one important factor needs to be taken into account, and that is the affordability of housing at current prices. If, for example, a young family wants to live in a comfortable apartment with a terrace or a house with a garden, the peripheral part of the city or the surrounding villages often become the only way to reach this type of property. In terms of housing affordability, we are in a very poor position in the Czech Republic.

Photo: MOLO Lipno

Your real estate agency also covers development projects. What are you currently in charge of? Could you briefly describe them?

I am currently in charge of the sale of the MOLO Lipno Resort project and we are preparing a new Garden Lofts project. MOLO Lipno is a unique building on the banks of the largest body of water in the Czech Republic. I think this location has great potential and will attract many buyers in the future. It has practically year-round use, during the summer it attracts water, and in the winter it attracts cross-country skiers and ice skating on the ice highway. If the local ski area is not enough for the more demanding skiers, they can go to nearby Austria. Spring or autumn can be cycled. A 150-metre-long pier with a swimming pool and restaurant will form a dominant feature, which will connect to the new promenade between the residential area and the hotel. There is nothing like it in the Czech Republic.

Garden Lofts is a more intimate industrial-style project in Prague 5. All apartments will offer practical layouts with balconies, front gardens or terraces with beautiful views. All in natural design materials and equipped with superior furnishing elements. A spacious communal garden for all residents, with pergolas with seating, a sports or relaxation zone, facilities for children and especially a water biotope for swimming, will also offer a unique opportunity for leisure.

MOLO Lipno Resort is an exclusive recreational project. Is there any interest in such expensive holiday properties when it is actually a second home for the clients, i.e. a considerable expense?

Yes, the interest is enormous. In the vast majority of cases, these are clients who already own a property and are only expanding their portfolio, and they are counting on these costs. Over the last few years, the demand for holiday properties has increased extremely, and with it, of course, the price level. And it doesn't just have to be a luxury apartment in the mountains.

Photo: Garden Lofts project

And what is the market interest in loft and industrial style housing (see the Garden Lofts project), which is stylish and original, but probably not suitable for everyone?

Loft living is still not so widespread in our country, although it is a modern and original style where you can customize the interior. Although the Garden Lofts project is not a typical representative of loft living, it combines these elements together with industrial details. And these stylish projects always find their buyers.

The architecture takes inspiration from the character of industrial buildings typically found in the Prague 5 area. The already mentioned private communal garden with a water feature will bring a huge added value. This will be built on a sloping hillside on several levels, which will connect to each other.

Photo: industrial interier in Garden Lofts project

Photo: design garden with own pool in Garden Lofts project

Real estate investments have been a big topic of late, given the uncertainty and security of finances. Are you seeing a growing interest in investment apartments? Are they being bought at all even in the luxury property segment?

Buying property is still one of the safest and most desirable forms of investment. In addition to good protection against inflation, it is a tangible element in a portfolio. Of course, it is also possible to invest in luxury ones, however, it is not so advantageous in terms of return. In this case, it is more about saving spare funds. At the same time, in the exclusive segment, those interested often put their emotions into the transactions, which is not entirely ideal for an investment plan.

What should such an investment apartment meet? What sizes, layouts and locations are most in demand?

An investment apartment should meet the desirable location attribute. These are usually smaller apartments that can be rented out quickly and easily. It will also sell much more quickly than a large unit if necessary. Unfortunately, the concept of an investment apartment in Prague is not what it used to be.

And will this investment pay off for people? At what level are rental yields now, for example?

If we talk about Prague, the current situation in terms of profitability is not ideal or as interesting as in previous years. I have to say that rental yields here are currently falling. Prices have been rising year on year, but rents have not risen significantly now thanks to the pandemic. For example, in the city centre, where we could find a lot of investment flats for short-term rentals and they generated high yields in the past years, the situation is now much worse than for investment flats in locations that hold their rent levels. So at current prices, it's hard to get a yield over 3% for an apartment in Prague.

In the context of the coronavirus pandemic, the rental housing market also changed last year, for example, there was a drop in short-term rentals such as Airbnb. People are also unable to afford to buy property due to ever higher prices. So are people increasingly turning to renting?

Unfortunately, the unaffordability of owning your own home is resonating strongly in the market right now. As there is no chance to meet the huge demand and the supply is very small due to the lengthy building permits, I do not see a better option than renting in the coming years in terms of the availability of own housing. I expect that we will be moving closer to the "western" trend in the sense that an increasing proportion of the population will move to renting than has been the case to date.

And how does this phenomenon translate into rental prices?

For example, rental prices in the centre of Prague have fallen slightly. The full centre, in the sense of Prague 1, has been affected the most because of the aforementioned impact of the coronavirus on the short-term rental market. I believe that some landlords who switched from short-term to long-term rentals because of the pandemic will not return to their original intention. It is mainly the big players that will "survive". However, in the long term, I expect a gradually increasing trend in rental prices.

Finally, a question for variety :-) What do you enjoy most about this job?

As I mentioned before, what I enjoy most is the variety, time flexibility and organization of work according to the current needs of the client or myself. I like working "in the field", meeting interesting people and last but not least negotiating. Of course, this work also includes less pleasant things and the associated administration. But the positives always prevail for me, and that is important. If you combine all that with good remuneration and the virtually unlimited (financial) opportunities you have in this field, it drives you forward.

 

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