Prague to get over 800 new apartments as city struggles with housing squeeze

Real estate group AFI Europe has announced plans to build hundreds of new apartments in the next three years. The company is teaming up with domestic developer Finep to build over 800 rental units in the capital – centering on Prague 9 and Prague 10. This partnership is set to bring in billions of crowns and marginally relieve pressure on Prague’s housing market.

According to deputy CEO of AFI Europe Doron Klein, the significantly high demand for affordable housing in Prague is a driving force behind the company's expansion plans. Property price growth in the Czech capital reflects this: experts estimate that rental prices rose by between 5 and 10 percent in 2023.

An analysis earlier this year by the Czech Rental Association (ANB) found that it expected “thousands more renters” on the housing market in the capital this year. Due to the skyrocketing rental prices, the ANB has also observed that more people are opting to move to the outskirts of major cities – such as to towns in Central Bohemia – to save money on rent.

Purchase prices are also a serious issue for potential homebuyers. According to realtor Maxima Reality, an apartment in the first quarter of 2024 cost CZK 125,500, up from around CZK 112,000 in the year-earlier period.

Maxima points towards the shortage of new buildings in the capital and references the notoriously long time it takes to receive a building permit in Czechia – sometimes up to one year – in contrast to a few months’ wait in neighboring countries.

CEO of Finep Tomáš Pardubický believes that this trend will continue, telling Czech media Seznam Zprávy: "I think that [the construction of new apartments] will reach beyond the borders of the capital quite fundamentally." Finep itself is planning the construction of approximately 5,000 rental apartments outside Prague at a later date, further expanding the region's rental market.

Pardubický notes that the “lack of affordable housing is fundamentally changing the landscape of the city,” with residential real estate becoming a "luxury good that not everyone can afford."

"Real estate prices in the Central Bohemian Region are growing faster than in the whole of the Czech Republic, even faster than in Prague," chief economist of Creditas Bank Petr Dufek told Seznam.

AFI Europe's advertised rental prices range from approximately CZK 350 to CZK 550 per square meter (m²), with the average rental price in the capital reaching CZK 400/m² according to Deloitte's Rent Index for the first quarter of this year.