The trend of so-called institutional rental housing, i.e. fully furnished apartments ready for immediate occupation, is gaining momentum in the Czech Republic. While in 2020 there were roughly 1,100 such flats in the Czech Republic, in the first half of this year the number was more than double, based on data from real estate consultancy BTR Consulting. According to BTR, there should be over 10,000 similar flats in the Czech Republic in 2030. For many Czech and foreign developers, this is a profitable investment after the reduced availability of their own housing, the company said.
BTR stands for “build to rent” and refers to properties built for rental housing. They can be self-contained flats or, for example, so-called coliving accommodation, a collection of smaller flats with shared communal areas. Full or partial furnishings, from kitchens to furniture or televisions, are a condition. BTR projects can also include external communal gathering spaces, gyms or children’s play areas. People usually use this type of rental for short-term rentals, for example for one or two years. Examples of BTR houses are Fragment in Prague’s Karlín district or AFI Home in Hloubětín.
“We have long observed an increasing interest in quality and professionally managed rental housing. For one thing, the younger generation prefers flexibility and does not want long-term commitments. And for developers, cooperation with investors and funds investing in rental houses means long-term stable cooperation and the opportunity to develop large territorial units faster than when they sell individual apartments to end owners,” said Zuzana Chudoba, CEO and founder of BTR Consulting. In total, there are 450,000 rental apartments in the Czech Republic, according to RE/MAX real estate broker Iztok Toplak, of which almost half are investment apartments owned by 71,000 private individuals.
BTR Consulting’s data, after comparison with the data of the consulting company Deloitte, shows that the average rental price of a BTR apartment in Prague is CZK 534 per square metre. Although it also includes utilities and services, it will cost almost CZK 150 per square meter more than the average for traditional rental apartments. The current vacancy rate for BTR apartments is 28 per cent and three quarters of the tenants are Czech.
The current yield, i.e. the ratio of return to money spent, on BTR projects is three to 4.5 per cent, according to the analysis. BTR Consulting expects it to increase to five to six percent in the future. Among the largest investors in the Czech Republic in this type of rental housing is the Czech developer Trigema, which is currently preparing 860 apartments in several Prague projects.
“Within eight years we want to create an asset of 1,000 rental apartments, which will be in roughly three categories. Coliving, i.e. living in minimal space at minimal rent. Then the so-called standard, where part of it will be in Paprsko na Stodůlkách and part in the Lihovar project. And finally, premium housing, which is the Fragment in Karlin,” said Marcel Soural, founder and chairman of the board of Trigema.
Other large investors in BTR include the Israeli developer AFI, Affordable Housing of Česká spořitelna, which recently bought 300 rental flats in Opatov from Sekyra Group with the insurance company Kooperativa, or XPlace, which provides construction, management and offer of rental housing for the Prague Archbishopric. Chudoba expects a lot of interest from foreign investors in the future. One of the coliving projects in the Czech Republic is being prepared by the Lithuanian investment company Baltic Asset Managment. It wants to convert the Vítkov hotel in Prague’s Žižkov district into 100 co-living apartments of between 15 and 48 square metres.
