The Prague Post Online: Real Estate: ECM's 'city within a city'

December 5th, 2008

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ECM's 'city within a city'

Prague development firm plans to transform the capital

By Curtis M. Wong
Staff Writer, The Prague Post
March 19th, 2008 issue

JAN PŘEROVSKÝ/THE PRAGUE POST

Tomáš Laštovka, EMC Group's vice president of development, calls the company's current CITY Project "the opportunity of a lifetime." enlarge

COURTESY PHOTO

City Tower was another success for ECM. enlarge

ECM Group

Na Strži 65
Prague 4
Tel.: 261 142 010
E-mail: inforeal@ecm.cz
Web: www.ecm.cz

Golden opportunities come along once in a lifetime. For Tomáš Laštovka, vice president of development at ECM Group, that opportunity materialized especially close to home.

After his studies had taken him to the United States in the early 1990s, Laštovka returned to his native Prague with plans to break into the field of construction engineering. It wasn’t too long, however, that he found himself on the real estate development track instead, joining forces with ECM as a project manager in 1999.

In the nearly eight years since then, Laštovka has watched the company expand into one of the country’s most well-respected development firms. Laštovka oversees its current project rooster, which is its most ambitious yet. The controversial CITY Project, which had been on the boards since 2001, is presently under way, despite initial concerns from groups who felt that its modern appearance would detract from the city’s historical character. The company is promising a complete makeover of the Pankrác section of Prague 4, going so far as to nickname the project “a city within a city.” The redevelopment itself operates on various levels — administrative, retail and luxury residential — with an estimated worth of 1.4 billion euros ($2.2 billion/35.1 billion Kč).

Calling the CITY Project “the opportunity of a lifetime,” Laštovka recently sat down with The Prague Post to talk about the changing face of Czech real estate, and why some of the best professional deals for developers can be found right here in the capital.

The Prague Post: What inspired you to enter the real estate industry as a professional?

Tomáš Laštovka: My field of study at university was construction engineering, so it was already quite [relevant] to real estate. When I finished my studies in the United States, I was given the opportunity to work back in the Czech Republic with an American real estate firm, which was developing one of the first shopping center projects in the country at that time, called Pavilion. In those days, it was like a miracle. I decided I liked the field, so I started to go ahead working in this industry after that.

TPP: What did you find interesting about real estate development initially?

TL: It was construction and management of construction that was interesting to me. From the beginning, I was working directly with real estate developers, and I found it to be an interesting business. It’s inspiring, you can see results, you have high stakes in the business. It’s changing every day, and the rules of the game are changing for any situation that you have. Every project is different, so you’re not repeating the same operation every day, and that’s the kind of job that I like.

TPP: When you began working at ECM, what would you say your biggest professional goal was?

TL: When I started at ECM, the biggest challenge at that moment was to develop a good concept for the CITY Project, as we call it. The Pankrác area had been, for various reasons, kind of abandoned … even though it’s perfectly located, there were a lot of troubles historically, because of ownership and structural issues as well as transportation issues and local initiatives that opposed any development. We started from scratch, developing a master plan. … We had to cope with all of the problems that you could possibly imagine. If this hadn’t been done properly, the whole development would suffer, and I’m pleased that we did out job correctly. Along with that, we had the challenge of redeveloping the CITY Tower, the tallest building in the Czech Republic, which was one of our flagship projects.

TPP: How would you say the real estate market has changed during your time at ECM?

TL: It became more stable, more predictable. I remember that the first institutional deals took place in the late 1990s. … In those days, the sale of an investment property was a big issue that nobody had experience with. The legal and tax concepts of selling those buildings [was unknown]. Now I wouldn’t say it’s a piece of cake, but it’s become a standardized process. You have standard forms of financing, which weren’t available in the past.

TPP: What do you think sets ECM apart from your many competitors in the Czech real estate development world?

TL: I would say we always target quality projects. We don’t accept the standards that most of our competitors are establishing for themselves. We try to think about what our clients will be expecting not today, not in two years, but 10 years in advance. Second, we always swim against the trends. At the moment, when people are focusing on certain types of products, we try to think ahead of time and into the future. We also try to market our investment portfolio in a noncustom way. And I’d say that most people who work at ECM have an entrepreneurial spirit that they maintained from the early days of the company. All of our project developers learned to weigh every penny before making a business decision. They consider our clients’ money as they would consider their own.

TPP: If you were to make a prediction about the future of the Czech real estate industry, how do you think things will progress over the course of the next few years?

TL: I definitely think the prices of quality residential projects will go up. Also, rents in retail and office buildings will increase as a result of the growing economy and the higher spending power of Czech citizens. The demand for those low-end projects in the suburbs of Prague will likely diminish. … Those were development ideas that came about for people who didn’t want to live in the congested center. I think we’ll see many wealthy citizens coming back to the city center. Unless the economy declines, I think you will see these kinds of trends in the Czech real estate market.

TPP: In the next few years, do you think that the Czech real estate industry will see the biggest growth on the residential or administrative side?

TL: I think there will be a much bigger growth in the residential sector, which hasn’t been saturated yet, especially in the middle and higher ends. We also have to bear in mind that the demand for quality office space is increasing every year.

TPP: Does ECM have an established regional presence in the Czech Republic?

TL: We’ve just completed one office tower in Ostrava, and it’s a fully leased project. We can name an office and hotel development in Plzeň. I’m very keen in investing in regional cities. It’s easier to develop in the regional cities than in Prague, because you’re usually a more welcome presence, because you’re one of few investors. Of course, those projects are still smaller.

TPP: Would you like to see ECM enter new regions or countries entirely?

TL: As part of our midterm strategy through 2010, we’ve already identified markets where we’d like to be present. Those include Central and Eastern European countries like Poland, Ukraine, Romania and maybe Bulgaria. We’re already present in Russia, and we’d like to maintain and increase our presence there. We don’t buy projects to sit on them. We buy them to develop them and grow continually.

TPP: What advice would you give to someone who’s interested in Czech real estate development?
TL: Be careful and try to think in advance. You have to have a vision. You have to offer the community something that it doesn’t have already. You have to find your niche product. … If you have the right product, your clients will find their way towards you. You have to always go for the better alternative. It’s a rewarding job. … If it was easy, everyone would be doing it.

Curtis M. Wong can be reached at cwong@praguepost.com

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