At the beginning of this year 2020, only few Europeans were interested in the mysterious virus that paralyzed China. The turn of February and March was a turning point for Europe, the first infected appeared and subsequently the numbers skyrocketed. The world has stopped. Coronavirus in the Czech Republic has paralyzed small and large entrepreneurs, state institutions, public, cultural events and the education system. The impact of coronavirus on economy is big.
We have the first phase of change behind us, along with a huge lifestyle change. Due to restrictions on people's personal contact and free movement of people, many people remained locked up at home. Just as we are considering every step out of our place of residence now, we also consider very carefully any steps in life. Many people, who are looking for a new property to buy or deciding when and how to sell a house, have begun to wait for what will happen. More than a month has passed since the declaration of a state of emergency now, the initial phase of the shock has subsided and things are starting to move again.
Many Czech cities live from tourism. Naturally, tourism also plays a significant role in Prague. The historic core, which is usually crowded with foreign guests at the time, is now empty. Tourists have disappeared, and thus the short-term rental operators in particular suffer in the real estate world, the most well-known intermediaries being, for example, the Airbnb service. Coronavirus has also caused the closure of many restaurants, bars, monuments, all hand in hand with the closure of borders for a long time will bear the consequences. More than 6 million tourists come to Prague every year, and now around 10,000 apartments for short-term rentals such as the Airbnb service remain empty. These apartments are now gradually coming to market. From our experience, owners of short-term rentals are now turning to us to rent their property for a long term. The center of Prague is our domain, we can offer a wide range of professional services. We organize online meetings, provide personal virtual tours and we are still fully available even in these days.
Despite the current tourism problem, people still have a natural need to live. For long-term leases, we expect a stable market without major changes. For various reasons, people need to change their place of residence, to move. Likewise, entrepreneurs need office or other space to run their business. We expect the greatest impact of coronavirus on the real estate market in rents. The apartments, which have become vacant with the departure of tourists, will need to be rented. Many will look, whether for housing or business, for a place with a cheaper rent. Others, who are currently doing well, will instead look for larger premises or head to the center, where prices tend to rise. Large companies are often not affected to a large extent by the coronavirus crisis. If such a company wants or needs to have branches in the center, it will continue to have them here and in time it will rent more. We are now noticing an increased interest of clients in tours. Many people work from home and have more time to devote to their real estate intentions. Or, on the contrary, they save time and use the newly offered personal online virtual tours from the comfort of home, where our salesman takes them to the property using a mobile phone with a camera and answers any questions asked.
Many apartment building owners, especially in the center of Prague, gain income from the ground floor or basement of the house, often a restaurant or retail outlet. What's happening now? The usual scenario is a situation, where the tenant of these premises necessarily needs to pay the rent, but has little or no income. According to the current decision of the Government of the Czech Republic of 14th April 2020 will restaurants, pubs, cafes and pubs with sales through the dispensing window open on 25th May 2020. Some smaller establishments up to 200 m2 will be open on April 27, 2020. Coping with the situation is quite individual, for some companies it may be to liquidation. Some entrepreneurs will have to look for smaller establishments in order to be able to pay the rent and staff, whose numbers have often been reduced. Other operators, on the other hand, find that they have begun to prosper and need more space. This applies, for example, to the operation of food deliveries, for which demand has now risen. It can be said that it will fall again after the opening of restaurants and pubs, but there will certainly be many busy clients who like the service and will use it more often than before.
As for office rentals according to our experience, the first group mentioned above predominates, ie clients are looking for smaller office space. There has been a decrease in interest in shared offices and a flexible type of lease, where the company rents offices for only a few months. Thanks to coronavirus, many companies tested work home office, i.e. working from home, and found it satisfactory, so they will only need smaller office space. Entrepreneurs now often find themselves in a rent crisis due to reduced incomes. Those who are rented in the premises belonging to the city, or some private individuals often receive a rental discount in the current situation. If the offices belong to institutions, mostly only receive deferred lease. Entrepreneurs also began to use the online world to a greater extent, new e-shops were created, and thus the demand for warehouse space increased. In general, the supply of offices for rent in the market has increased. It should be added that 10% of business entities have already closed down and another 10-30% will meet the same end.
After the first phase, when most clients have decided to wait with vital decisions, the real estate market is set in motion again. Now comes the key moment. Will the government approve Minister Schiller's proposal to abolish the property acquisition tax? The tax is 4% of the purchase price of the property, which has been paid by the buyer in recent years. Many buyers are looking forward to the decision. The considered date from which the property acquisition tax would not be paid is March 30, 2020, the measure would apply retroactively, even if it was adopted later. However, some buyers want their newly found dream property immediately, so they are not waiting for anything and are acting at this time as well. Investing money in real estate is also a defense against inflation. From our experience, we can confirm that the real estate sales market has not stopped. Last month, among other things, we managed to find a new owner for a beautiful residence in Jinonice worth 52 million Czech crowns.
Kdy zmizí koronavirus, nikdo neví. Již nyní je jasné, že na trhu s nemovitostmi se objeví mnoho bytů, které doposud sloužily pro krátkodobé pronájmy typu Airbnb. Centrum Prahy skýtá mnoho krásných bytů, které byly obsazeny turisty. Některé budou opět pronajaty, tentokrát dlouhodobě, jiné změní majitele. Je to příležitost pro ty, kteří vždy chtěli žít v centru, a tyto nádherné byty v nabídce nebyly. Co se týče kanceláří a maloobchodů, nastanou změny. Některé podniky se budou stěhovat do větších, nákladnějších prostor a mnoho podniků do menších a levnějších. Z hlediska prodeje ať již rezidenčních, nebo komerčních nemovitostí, je možné, že se krize způsobená koronavirem neprojeví. Po počátečním šoku a období, kdy se mnohé obchody zpomalily, se trh již pomalu vrací k obvyklému objemu poptávek a nabídek. Je možné, že dojde k mírnému poklesu cen, extrémní pokles však neočekáváme. Specializujeme se jak na rezidenční, tak komerční prodej i pronájem nemovitostí, rádi Vám poskytneme komplexní přehled o aktuálním dění na trhu. Můžete kontaktovat přímo vedoucího týmu pro Vás zajímavého segmentu trhu nebo se pro začátek podívat na naši nabídku nemovitostí.
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