Brief summary of the situation in the real estate market
Dear clients and business partners,
the effects of the Covid-19 pandemic are being felt to a greater or lesser extent by all of us. Everyone is trying to deal with this situation as best they can. This is no different in the real estate market, whether in residential or commercial real estate.
Looking to the future, real estate investments are being reassessed more than ever before. In recent weeks, a large number of flats have been launched on the market, which were used by the owners for airbnb before the pandemic. Due to the acute need to rent these flats, flats in the center of Prague have become more affordable at the moment. The sale of residential real estate has not slowed down significantly and developers are not yet considering reducing prices. We recommend that you do not delay if you are considering buying a property.
We assume that after the overall situation calms down (and is already happening), the real estate market will start to gain momentum.
In the area of commercial leases, everything is based on long-term leases, so short-term fluctuations would not have to significantly affect the market. The most sensitive to current restrictions is, of course, the market for the lease of retail space, where a significant part of the premises is closed and some are already terminating leases.
In the office rental segment, it is still early for forecasts. Over time, changes can be expected in the way tenants will use office space in the future and whether the now widespread use of work from home with the support of modern technologies will have a more significant effect.
In the area of the investment market, the market remains active, although it may seem that some investors have chosen a wait-and-see strategy. We are convinced that this situation is only current and we can expect increased activity soon.
One of the positive news on the real estate market recently is that from 1.7. the pre-emption right to real estate is being adjusted. This change should facilitate the sale of real estate, especially housing units.
We asked the lawyer Mr. Mgr. Michal Bedrna from the law firm Bedrna and partners, with whom we have been cooperating for a long time, on a summary of important information in the residential and commercial sector:
On April 8, 2020, the Chamber of Deputies adopted several government bills, including laws that regulate the deferral of rent payments for apartments and commercial premises.
For the lease of flats and houses for living, the landlord may not prematurely terminate the lease due to the rent debt for the period from 12.3.2020 to 31.7.2020 until 31.12.2020, if the tenant did not pay due to restrictions arising from extraordinary measures in connection with epidemics. However, tenants will have to provide proof of this from the employment office. It is not yet clear how this will take place. The tenant will then have to pay the due rent by 31.12.2020.
The same applies to the lease of commercial space, only with different terms. The landlord may not prematurely terminate the lease due to the rent debt for the period from 12.3.2020 to 30.6.2020 until 30.6.2021, unless the tenant has not paid due to the restrictions resulting from extraordinary measures in connection with the epidemic. The tenant will then have to pay the due rent by 31.12.2020.
The reliefs certainly do not apply to service and energy charges.
It follows from the above that tenants in both categories are not entitled to rent rebates or rent waivers, but only to defer payment if they are able to prove that they have been affected by government measures. They are then also protected in terms of early termination of the lease. These laws have yet to be approved by the Senate and signed by the president.
Professionals, a real estate and consulting company, is of course ready to provide our services to both owners, landlords and buyers, tenants and investors. It is now important to take advantage of effective information sharing and to support the matching of supply and demand through professional firms such as Professionals and its long-term business partners.
We believe that currently positive information about the development of the pandemic will continue to come and we will all return to normal life soon.