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Beyond the cottage

Rising demand is prompting second-home buyers to look abroad

By Markéta Hulpachová
Staff Writer, The Prague Post
May 30th, 2007 issue

Portugal: 8.5 million Kc
Czech Republic: 2.5 million Kc
For city dwellers, few weekend pastimes rate higher than “going to the cottage.” From Easter to October, it’s common to find the outbound lanes of Prague’s highways jammed with throngs of locals jetting out of the smog to the leafy respite of their second homes.
The national affinity for cabins and cottages — chaty and chalupy — dates to the communist regime, when strict border controls prevented people from traveling outside state territory. Nearly 18 years later, the demand for weekend retreats is once again on the rise.
Since 2005, real estate firms have recorded a nationwide boom in the sales of recreational housing. For the first time, buyers are looking beyond national borders due to the soaring prices and limited availability of domestic property.
Industry professionals attribute this boom to an overall economic upswing and the public’s increased taste for investment. Buyers are beginning to find new potential in recreational housing, seeing it as not just weekend retreats, but as secondary homes.
“Secondary-housing projects are on the rise,” said Tomáš Kulman, tourism development manager from the advisory firm KPMG. Investors are drawn by privacy, comfort and the possibility of recreational activity, he said.
In some of the most desirable vacation spots — such as the Krkonoše and Šumava national parks — limited availability has driven vacation-home prices as high as 45,842 Kč ($2,181) per square meter, according to a study this year by KPMG and Arllen Development.
“The trend is making a gradual return” from communist days, said Petr Illetško, president of the largest domestic online realty company, AAAByty.cz. Demand has increased even more since the start of this spring, he said.
The most sought-after locations include the north Bohemian national parks of Krkonoše, Jizerské, Orlické and Krušné hory, south Bohemian Šumava and the Moravian-Silesian Beskydy Mountains. Equally popular are the areas surrounding the country’s dams, especially at Slapy in central Bohemia and Lipno in south Bohemia.
Because national-park status inhibits further development, cottages are scarcely available in these regions. In popular ski areas such as the Krkonoše, new developments instead concentrate on the construction of recreational apartment complexes within town limits. At the Špindlerův Mlýn ski resort, where apartment demand has more than doubled since 2005, a 2+1 apartment can cost as much as 7 million Kč.
In an already oversaturated market, domestic buyers also face competition from abroad.
“Recreational housing works as a good investment not only for Czechs, but also for foreigners,” Kulman said. Foreign investment is especially popular in the country’s periphery. “The Dutch are primarily interested in the north, while the south has attractive localities for Germans and Austrians,” Illetško said.
With increased competition, domestic buyers are committing to larger investments. The number and value of recreational-housing mortgages has grown steadily since 2002, said Hypoteční banka spokeswoman Jana Hezinová.
“In 2006, the average recreational-housing mortgage was 822,000 Kč. This year, the average is 931,000 Kč,” she said.
The limited availability of housing in top vacation spots is also causing buyers to look toward “second-choice” localities. But, even here, prices are quickly rising. Real estate prices in areas to the east and west of Prague, popular due to their proximity to the capital, grew 10 percent since last year, as did properties in the Sázava River region of central Bohemia, Illetško said.
Alpine investment
In the past two years, national demand for recreational real estate has broadened buyers’ horizons: More Czechs are beginning to purchase property abroad.
“Since 2005, we’ve experienced a more than 100 percent increase from one year to the next,” said Jan Rejcha, owner of Rellox, a Prague real estate firm specializing in the sale of foreign property. “People are realizing that buying an apartment in the Alps is often easier than buying something in the Krkonoše.”
Once seen as an unattainable luxury, recreational property abroad is becoming financially feasible.
“Basically, if you can afford to purchase an apartment in Prague, you can afford to buy one abroad,” Rejcha said.
The most popular foreign purchases are in Austria, Italy, France and Croatia. Winter and summer destinations are equally popular, a relative rarity among Europeans.
“A typical German or English investor prefers summer-vacation housing,” Rejcha said. “The 50-50 split can be explained by the fact that Czechs are big skiers.”
In nearby winter recreation areas, such as the Austrian ski resort Kaprun/Zell am See, Czechs form a key fraction of the investment market.
“It’s close, and it’s about as financially feasible as an apartment in Špindlerův Mlýn,” Rejcha said.
But, as airline ticket prices decrease, buyers are also willing to invest in more distant areas such as in Spain and Italy.
“With better flight connections and lower prices, the trend is growing,” said Rejcha. “It’s not just for billionaires anymore.”

Markéta Hulpachová can be reached at mhulpachova@praguepost.com


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