Bedřich Skalický stands in his large, airy office on Vinohradská street admiring the view of the Olšanské cemetery. "There used to be a sign down there, as part of some advertising campaign, that read, 'We're closer to you.' I though it was pretty appropriate," he says with a chuckle. "Having an office right by a cemetery really puts things into perspective sometimes." As the general director of Realitní společnost České spořitelny, a residential real estate agency that is 100 percent owned by the bank Česká spořitelna, Skalický was responsible for building the company from scratch three years ago. When you have a busy schedule and a family to take care of like Skalický does, it really helps to occasionally get a different perspective on things. The downside of the Vinohrady location is its remoteness from the city center. "Maybe it would be better for a real estate agency to be somewhere downtown," says Skalický. "We have to work extra hard to make ourselves more visible." Of course, with a well-known brand like Česká spořitelna in the company's name, visibility isn't too much of a problem. The biggest challenge, as Skalický explained during a recent interview with The Prague Post, is the unpredictability of the residential real estate market.

The Prague Post: What are some of the advantages of being affiliated with a big, well-known bank like Česká spořitelna?

Bedřich Skalický: For the most part, I am exactly the same as my competitors. I don't want to be exceptional and I don't consider this company to be exceptional. What sets us apart from other real estate agencies is the name. By being able the use the Česká spořitelna name, we're a little more visible. It's a name that has a history, but with it also come certain obligations. We have to live up to that name. Česká spořitelna is a well-trusted bank, and its clients often come to us. So we have to do our job well, so we can do the name justice. Another advantage is that we can offer a lot of our services as a package that uses the financing options of Česká spořitelna. As a result, I think we can sometimes offer slightly lower prices than our competitors. Of course, clients don't have to buy the whole package and are free to use other financing options. And when it comes to the properties we offer, only about one-third of the projects have been financed by Česká spořitelna; the rest are financed by other investors.

TPP: You now have branch offices in Brno, Ostrava, Kolín, Liberec, Plzeň and Olomouc. Do you have further expansion plans?

BS: I think that at the moment we're happy with the way things are and won't be expanding elsewhere just yet. We tried to cover the regional cities so that we have a solid network across the Czech Republic. Our partners in these regional city branches aren't responsible just for the city but for the whole surrounding region. And the partners in these regional offices have quite a lot of freedom as to what sort of business strategy they want to adopt. It's the McDonald's system: If one of my clients in Prague moves to Ostrava, he can expect to get the same level of service there that he got with us.

TPP: What trends have you noticed on the Czech residential real estate market?

BS: I think the evolution of the market here follows the evolution of the population. In the early days, when the market first opened up, the offerings weren't that plentiful or diverse. Many people just wanted to find housing, period. They didn't think about the options too much. That's no longer the case. Today, many people look at housing as an investment. This means that selling new developments today is more complicated than it was five years ago. Before, people would quickly buy up apartments that hadn't even been built yet. Today, there is a greater number of new developments, and clients can be really picky. They also tend to be much better informed than they were in the early days. Usually, the first thing that people consider is the location and the surrounding infrastructure. If the standard is high and the location is good, people are willing to invest a fair bit of money into their new house or flat. And they are confident that they will eventually get a return on their investment if they decide to sell their property a few years later. They're also quite confident that the value of their property won't go down. Our clients today are thinking much more long-term. People aren't buying property just to satisfy the immediate need to find housing.

TPP: Properties in a lot of major Western cities are, according to experts, currently grossly overvalued. Is there anything resembling a real estate bubble here or is the market still too young?

BS: I think that the market here is very fair. Many people anticipated that after the Czech Republic's entry into the European Union [in May 2004], property prices would shoot up. But this didn't happen. I think that prices here accurately correspond to the prestige of the location. There are locations where the market value of apartments has gone down — this applies mostly to flats in paneláks [pre-fabricated apartment buildings]. And then there are places where the prices continue to climb. This is the case in well-established residential areas such as Prague 6 and, of course, in the city center. But I think that the growth of property prices in these locations is natural. The properties aren't artificially overvalued. And compared with cities like Vienna or Munich, properties in lucrative locations here still haven't reached their full potential market value. So I'm sure that prices in downtown Prague will continue to grow. It's a natural evolution. Three years ago, you could have bought an apartment on Pařížská street for 80,000 Kč [$3,250] per square meter. Today, for that same apartment, you would be paying something like 150,000 Kč or even 200,000 Kč per square meter.

TPP: Do you think the trend that started in the 1990s, when people were eager to move out of the city into family houses, will continue?

BS: It's true that 10 years ago there was a building boom on the outskirts of Prague, and a lot of new satellite towns emerged within commuting distance. But these areas had one big handicap: There were often very poor transportation options and things like schools, shops and entertainment venues were far away. So I think a lot of these people eventually began to consider moving back into the city center. These days, there is a growing number of people who have a property outside of Prague and maybe a smaller apartment in the city that they use during the week.

TPP: Do you think that the higher gas prices might also contribute to the trend of people moving back into the cities?

BS: That's an interesting question. I think that increasing gas prices will have a big impact on all aspects of the real estate market. If the prices continue to climb, people will start being much more careful about how they spend their money. Most people won't be willing to give up their cars. I think that for a lot of people, having a car continues to be more important than having a high standard of housing. So it's very possible that if gas prices continue to rise dramatically, the real estate market could cool down as a direct result.

TPP: So would you dare to make a prediction as to what the real estate market will look like five years from now?