When FINEP & partners first came onto Prague's real estate scene 10 years ago, the market for small apartments was, like everything else, stagnant. But the company grew with the market. By the end of its first eight years, FINEP had sold nearly 2,000 apartments.

These days the small apartment market is booming, and FINEP is increasing the scope of its projects — from individual buildings to large residential parks. FINEP Marketing Director Jan Zachariáš took time to talk to The Prague Post about trends in the local housing market, and the niche that his company has carved out for itself.

The Prague Post: FINEP was founded at a time when there was virtually no accessible residential development for the mass market. What was the situation like for buyers?

Jan Zachariáš: It was not that easy to find a flat under 50 square meters [540 square feet]. And if there were any developments, they were targeted to the luxury market. There are several reasons why this was so; the main reason was that there was a lack of accessible financing for the mass market, 10 years or even six years ago. Ten years ago, the average family could not afford the cheapest apartment in Prague. The mortgages were out of reach for the majority of people.

TPP: What was the financing situation like?

JZ: The way developers worked was that the clients came to them and paid 30 percent or 40 percent of the deposit, and the developer used that to finance the construction. It was a huge risk for both the client and the developer. It resulted in many bankruptcies, because if the sales didn't go well, they couldn't build.

TPP: How does that compare to the current situation?

JZ: It has changed a lot. The developers now, including FINEP, are financially stable. We don't use the client's money for financing construction. Any client who wants to buy an apartment has to pay 15 percent of the apartment as deposit, but that's just to show his interest in the unit. There is a big boom in Prague because of the very accessible financing. In fact, we can say the reason our company is growing is because the market has changed significantly. More and more people can get mortgages. Our typical clients are very young families with average incomes. It is not necessarily the big income earners in Prague.

TPP: FINEP & partners says it creates 'single-use companies' for each of its major projects. What does that mean?

JZ: Well for example, we have a huge project called Nová Harfa in Vysočany [in Prague 9] and we set up a single-use company, FINEP Harfa, only for developing this specific project. We also invite different investors into different projects. So in fact each company is owned only by FINEP or FINEP and its partners.

TPP: Why do business that way?

JZ: Because it is clearer and more transparent to the banks that give FINEP the construction loans. Single-use companies have their own accounting. The banks don't require this system but they welcome it. They all know the structure and the ownership.

TPP: Doesn't that create more problems in terms of paperwork and bureaucracy?

JZ: Not at all. If we face any difficulties in the Czech market, they are the standard difficulties that any other developer faces — not regarding the funding, but regarding building permits and construction.

TPP: Your company does the majority of its development outside of the center of Prague. Why?

JZ: It is not that we don't want to develop downtown; it is just easier. There are not so many big properties downtown or in the wider downtown area. If there is a big property downtown, it's likely to have many owners or other problems. The number of bigger properties available is decreasing rapidly.

TPP: What area has the greatest potential for the type of large-scale development FINEP does?

JZ: We perceive it to be Vysočany, which right now is all brownfields. It used to be an industrial area. But we call that area the future center of Prague, because this is a huge area for development that is not limited by any historic preservation, etc. The infrastructure is excellent. If we can compare, it will be very similar to what happened in London 10 or 15 years ago. The Docklands were in the same situation that Vysočany is in now. But today, the Docklands site is a commercial and residential center of London.

TPP: Do you see the trend of developing former industrial zones increasing?