Experts across the sectors agree that the hired situation between Russia and Ukraine will also have a significant impact on the Czech economy. The question still remains how big and in which segments we will feel it the most. The most likely scenarios will lead to high inflation, high energy prices and also an increase in interest rates. Jan Večerka from the platform aggregating opportunities in collective investment outlined more.
How does the real estate investment market affect current events in the world?
The initial reaction from the market is a huge shock, when everyone is considering how to continue with the upcoming projects. Russian aggression in Ukraine brings a lot of uncertainty to the real estate market. Long-term financial planning is essential for every real estate project. A large part of the planned transactions is affected by uncertainty, when we do not know what this aggression will cause in terms of inflation, interest rates. If the effects are only short-lived, I am convinced that the real estate market will recover very quickly, as it was after the shock of the covidid epidemic. If the crisis is long-lasting, it is likely that the consequences will be reflected in further inflation growth and the associated rise in interest rates. Rising interest rates will subsequently make it necessary to postpone or revalue a number of real estate projects, which may lead to downward pressure on offer prices.
Are you following any major changes in investor behavior?
Investing in real estate is a long-term activity. For this reason, it is very difficult to predict a trend based on a week and a half old events. The initial response is to wait for the Russian attack on Ukraine to turn out.
Do you think this is a short-term condition? What is your prediction?
It is already certain that Russian aggression has caused changes that would be completely unthinkable at other times and will have a long-term impact. A major impact on construction can be expected, with energy savings and the transition to non-fossil energy sources finally becoming a priority. From a real estate investment perspective, it is crucial how interest rates develop. Current predictions are that Russian aggression can last for months, maybe years. If this prediction turns out to be correct, it will result in further increased inflation, which will be reflected in the pressure to further increase interest rates.
How can / will affect the current events of the Czech Republic in particular (from an economic point of view)?
I have already mentioned inflation and interest rates. In the long run, energy shortages may occur next winter. Another factor will be the number of newcomers fleeing Ukraine in the context of the length of Russian aggression. These people need to be housed somewhere, and if the war lasts a long time or Russia takes up part or all of Ukraine, these people will increase the pressure on free housing. At the same time, these people can help with the current shortage of workers in the Czech economy.
What specific trends do you see from BrikkApp data?
We are in contact with a number of domestic and foreign real estate crowdfunding platforms. The main news in recent days is that the market has slowed down and investors are waiting in which direction the situation will develop.
Jan Večerka, founder and CEO of BrikkApp, brikkapp.cz crowdfunding platform that mediates collective real estate investment in various European countries
