Financial crisis affected development projects

Prague - The global financial crisis has already impacted many plans of domestic developers. Construction is unlikely to stop due to the crisis, but companies may postpone their realization for a while. However, construction will not progress very quickly during the duration of the crisis, as indicated by a survey conducted by ČTK among real estate market experts. Some development projects in Prague and the regions have already been put on hold by investors.
    Experts generally agree that the construction period will be extended due to the crisis. "It is very likely that most of these projects will be postponed due to the economic crisis, primarily because of financing issues," said Stuart Bloomfield from the consulting firm CB Richard Ellis, to ČTK.
    Banks have made it more difficult for developers to access loans, demanding a higher share of their own resources, as well as a greater number of pre-sold apartments or leased offices.
    "According to the latest information from the banking sector, financing can only be obtained for smaller projects worth up to 150 to 200 million crowns," said Jan Kovařínský from the consulting company King Sturge. "For larger projects valued over 200 million crowns, the provision of loans has effectively stopped in the fourth quarter of this year due to a lack of money in the interbank market," he added.
    This is evidenced by numerous examples from across the country. For instance, in the center of Ostrava, the site of the future Nová Karolina, which was once a coking plant, will remain a construction site indefinitely. The company Multi Development announced in mid-November that due to the crisis, it would temporarily suspend the construction of residential buildings and a commercial-entertainment center. Construction work continues only on the future administrative building, thanks to cooperation with Passerinvest Group.
    In Brno, the construction of one of the largest buildings in the Spielberk Office Center has been stalled for half a year. The development company CTP Invest postponed the project due to other investment-intensive activities and plans to restart it next year. Construction has not yet begun in Brno's Černovice either.
    An example of the impact of the crisis is also the delay in the construction of a complex consisting of a hotel, apartments, and an administrative-commercial center in Ústí nad Labem. Czech Property Investments (CPI) originally wanted to have the center finished by next spring, but has temporarily suspended the planned construction this year.
    However, not all projects are delayed due to the financial crisis or a lack of interest in housing. Delays can also be caused by holdups in the construction permit process.
    For example, in Plzeň, the start of five large residential projects is being postponed due to changes in zoning plans and delays in discussing zoning and building permits. Due to objections from residents in the Broumovská housing estate, the construction of an eighteen-story building in Liberec is also being delayed.
    There has also been a noticeable drop in demand for new apartments. "People are uncertain and are choosing more carefully. For standard projects, developers must offer something extra," said Michaela Džupinová, director of the Plzeň real estate agency Pubec. The interest of buyers is primarily affected by location, transport accessibility, the building materials used, architectural features, and of course, price. "It is clear that the time when Czechs bought practically any new property is definitively over. The demands are rising," confirmed real estate agency director Petr Illetško.