Crisis in Ukraine brings new clients to Czech developers

Prague - The ongoing crisis and tension in Ukraine are benefiting the largest Czech developers. Some of them have recorded an increased interest from Russian-speaking clients in new apartments, primarily in Prague, while others expect a rise in the near future. This emerged from responses from the largest apartment sellers contacted by ČTK. The share of buyers from former Soviet countries has gradually decreased in recent years to about five to ten percent of the 5000 new apartments sold in Prague.
The commercial and marketing director of the development company Daramis Group, Martin Vachek, believes that people from Russian-speaking countries are primarily seeking a safe refuge in the Czech Republic. "People from this area have significantly shown interest in properties in the Czech Republic in recent months. It wasn't just Russia and Ukraine, but also the Baltic states and Kazakhstan. It was related to their efforts to allocate their resources in a location that is safer than where they currently are," said Vachek from Daramis Group.
Mild increases in this group of buyers have also been recorded by Central Group, which sells hundreds of apartments in the capital annually. "In connection with the crisis in Ukraine, we have noted a slight increase in clients from Russia and other former USSR countries in the range of several percentage points," noted Jiří Vajner, the commercial director of Central Group.
Conversely, according to the CEO and chairman of the board of Ekospol, Evžen Korec, the impact of the Ukrainian conflict on the Czech residential market has yet to manifest. "Acquiring a new apartment is considered a fundamental investment related to key life decisions and changes, such as finding a job in a distant city, starting a family, or a major change in life philosophy and values. These decisions are not made hastily but also over a longer time horizon. From this perspective, the 'Ukrainian crisis' has been ongoing for a short time so far," noted Korec, stating that long-term, about 3.5% of the total number of sold apartments comes from people from the former Soviet Union.
Significant changes were not recorded by the director of the real estate agency Lexxus, Peter Višňovský, either. "In such a short period, we do not register a significant change in the frequency of Russian clientele. However, if the situation escalates further and the sanctions against Russia have a real effect, I expect increased demand from Russian clients," Višňovský stated, suggesting that this could lead to Russia strengthening its state position and increasing restrictions on the personal rights and freedoms of Russian citizens – including property rights.
"It can be expected that wealthy Russians will increasingly try to safely 'divert' their financial resources beyond the reach of the all-encompassing Russian state power in reaction to this development," emphasized the head of the Lexxus real estate agency, who estimates the share of Russian-speaking clients at five to ten percent.
It is said that this type of client has reacted the quickest to the ongoing crisis. "We have been recording a greater interest from Russian clients since last autumn. And the increase compared to the previous year is nearly one hundred percent. Unfortunately, the interest from Russian and Ukrainian clients in investments in Prague has rapidly increased also due to the unstable political and economic situation in both countries," stated Ilona Monferini Mančíková, the sales director of FIM Group, whose company specializes in the most luxurious properties in the center of Prague.
She did not want to estimate how the whole situation will end. "However, it can be assumed that the interest from clients will not diminish. On the contrary, I expect it to persist at least for the next few months," added Monferini Mančíková.
Sales of new apartments in the capital are gradually increasing; last year alone, developers sold 5000 apartments in Prague. The growth continued in the first half of this year, during which developers sold twenty percent more new apartments year-on-year, totaling 2850. At the end of the first half of the year, developers had 6600 new apartments on offer in Prague with a total catalog value of 30 billion CZK.