Short-term apartment rentals in Prague have emerged as a serious investment opportunity. Profits from short-term rentals can achieve several times the value of standard, long-term rental leases. The apartment’s location naturally plays a big role in the success of any investment of this type, Prague 1 and Prague 2 being among the most popular locations in the Czech capital. The short-term rental option is popular primarily among tourists visiting the capital and for employees of international companies. But, as with most things, there are two sides to the coin.
“While buying an apartment in attractive Prague locations to be used as a short-term rental is an interesting investment opportunity, it is important not to be overly optimistic. Short-term rentals – in comparison with long-term rentals – bring about not merely higher profits but also higher costs, their operation is more time-consuming, and they can strain relations with the neighbors. What’s more, the short-term rental business has recently seen a considerable increase in competitive pressure,” said Prokop Svoboda from the Svoboda & Williams real estate agency.
He also believes that a short-term rental operator should be prepared to cover extra costs that result, since such apartments and their amenities wear out more quickly, and the costs for providing regular cleaning, laundry and the changing of towels and bedding are higher. It’s also important to take into account advertising fees on accommodation servers, tourist fees (the so called “spa-fee”), a higher tax rate (accommodation services are subject to VAT) and also extra costs resulting from the new Electronic Registration of Sales system.
“Landlords also have registration obligations with respect to public offices and – should they aspire to reach good rankings on accommodation servers – they need to be active, communicate with their guests, organize their arrival, departure, airport transfers, etc. Moreover, the short-term rental business has been witnessing a dramatic increase in competition: in the course of last year, the number of apartments offered in Prague via the Airbnb server, for example, has grown by, roughly, 150%,” continued Svoboda. “This brings about pressure towards lowering the prices as well as higher client-demands with respect to location and the rankings of the host. It is also worth mentioning that operating a short-term rental apartment can generate tension between the landlord and long-term residents who may complain about noisiness of the guests or about strangers moving about the building.”
