The surplus of luxury apartments in Prague is excessive

Prague - The sale of luxury apartments in Prague behaves similarly to the entire apartment market during the economic crisis. Apartments for the wealthy are certainly not flying off the shelves, with supply significantly exceeding demand; however, the market has not entirely come to a halt.
     Luxury apartments make up only a fringe of the entire market. The supply of luxury apartments accounts for approximately two percent of the total number of apartments currently available in the Prague market. Builders in Prague are currently offering around 7,100 apartments for sale, of which only 165 can be classified as luxury. Of the 300 developer projects examined, only about 19 contain luxury housing.
     Labeling an apartment or project as luxury is, however, a very tricky matter, as there are no fixed criteria for it, notes Jaroslav Drda from Trigema. In the presented survey, the basic criterion was a price exceeding 90,000 crowns per square meter.
     Analyst Ondřej Novotný from the real estate consulting firm Jones Lang LaSalle also approaches the definition of luxury in housing with caution. "It is housing that is unique in its location and standard of implementation. In Prague, apartments in the price range around 100,000 crowns per square meter and above can be included in this category, however, the perception of luxury is very subjective," said the expert to ČTK.
     According to the construction company Skanska, the average price of new apartments in the capital at the end of last year was 8.5 percent lower year-on-year, with the average price per square meter in the metropolis being 57,403 crowns.
     "The luxury segment follows exactly the same rules as the entire market," Drda said. This means, according to him, that in the market for luxury apartments, supply currently significantly exceeds demand, apartments are selling more slowly, and clients are pickier. However, luxury apartments have not stopped selling even in economically turbulent times, Drda from Trigema stated.
     "Compared to previous years, luxury apartments are mostly being purchased by Czechs, compensating for the drop in demand from abroad are the Russians," said Prokop Svoboda from the real estate agency Svoboda & Williams at today's conference. "Additionally, this is no longer an investment in endless property appreciation, but rather an investment in comfort, representing a lifestyle statement," he added.
     An example of a luxury apartment project in the metropolis is the renovation of an apartment building in Prague near Kampa by the J&T group. There, the average price per square meter is 200,000 crowns. Most of the 25 apartments in the project have already been sold.
     The Central Park Prague project in Žižkov was also supposed to cater to demanding clients. A total of 547 apartments have been standing there since 2009, and by the end of January, about half of them had found buyers. Due to weaker demand, the developer CP Praha had to lower its prices. According to the new price list, the cheapest apartments in the project can be purchased for 55,000 crowns per square meter, while in the previous price list, the cheapest apartment was priced at 74,000 crowns per square meter.