The growth rate has been slowing in the last year. However, a significant increase in demand for rental housing can still be expected, given the low availability of owner-occupied housing. Institutional rents will be the cause of the growing difference in the rental prices of older apartments compared to new, often fully equipped rental projects with low energy demand, which additionally provide various types of services.
Institutional rental housing on the rise
Rental housing still holds a very attractive position within the residential market. Investors’ expected rate of return on BTR (bulit to rent) projects remains relatively stable. The increase in the number of projects is gradual, as it is still a relatively new specific investment product, which must be approached cautiously with regard to the long-term investment horizon and the related sustainability of demand.
“Currently, the market has seen a slight decrease in occupancy for BTR projects, which is due to the completion of the largest rental project in Prague to date, namely AFI Home Kolbenova with 313 residential units and the start of pre-leasing for the Mozaika Holešovice project with 178 residential units. However, we consider this reduction to be temporary due to continued significant demand.” said Kateřina Poláková, head of the residential real estate department at Knight Frank.
The average rent for BTR projects also fell slightly, as it is a demand rent based on the current offer on the market, which is currently made up mainly of new units outside central locations. However, for existing BTR projects in established locations, stable and sometimes even increasing rents can be recorded.
In the coming period, the projects Vysočanský mlýn in Prague 9 and Lihovar Střížkov in Prague 5 will be completed.
Institutional rents will be the cause of the growing difference in the rental prices of older apartments compared to new, often fully equipped rental projects with low energy demand, which additionally provide various types of services. Individual rental projects differ in their focus on different target groups, where on the one hand there is the provision of affordable housing for the necessary professions and on the other hand the offer of luxury housing associated with extra services.