How do the strategies for investing in and operating rental housing in the Czech Republic stand in relation to those found elsewhere in Europe? We interviewed Stanislav Kubáček from Heimstaden, who is responsible for investments in Central Europe and Germany. He also brings European insights in the presidium of the Rental Housing Association of the Czech Republic.
You have experience in the investment and management aspects of the European rental housing market. What are the trends in rental housing and is governmental assistance needed in the Czech Republic?
The Heimstaden real estate portfolio spans across nine European countries, where we are witnessing a resurgence in the popularity of rental housing within all major cities. This trend is attributed to the advantages of renting, such as the ability to move in swiftly with minimal initial expenses, the ease of relocating, and the convenience of having the landlord handle maintenance and repairs. Consequently, even individuals with modest incomes have the opportunity to secure high-quality housing in desirable areas without the long-term financial commitment associated with a mortgage. We are also introducing new projects tailored for renters, which include comprehensive flat features, options for extended leases, and a range of services. The surge in demand for rental properties over the past two years has been propelled by the steep rise in real estate prices, making owning a home less affordable for many people for this reason as well. Regarding state intervention, the housing sector is facing significant constraints and regulations. Prospective homeowners are challenged by long delays in obtaining building permits, stringent technical standards, and limited land availability in their preferred localities. State support is especially needed in speeding up building permits, preparing the infrastructure so that it is possible to build at a greater distance from city centres, but in a way that transport links are not being limited.
Do standards for rental housing exist in Europe from the viewpoints of developers and tenants? How is he Czech market influenced by these standards?
In numerous European countries, institutional rental housing, which includes a variety of additional services, is well-established and traditionally integrated into the housing market. Developers have a clear understanding of the types of projects that attract clients, while potential renters have established expectations regarding their housing. In the Czech Republic, the concept of rental housing was previously associated with social housing. However, the emergence of new institutional rental housing developments is challenging that perception, and the public is gradually adapting to it. In countries like Germany, it is customary for families to reside in rental properties for extended durations and to furnish their apartments themselves. Yet, the younger generation there is starting to show a preference for prefurnished living spaces. In the Czech Republic, it is also the new norm for rental housing projects to have appliances, furniture and decorations already in the apartments, and institutional landlords offer additional services such as parcel collection, round-the-clock reception, etc.
Mortgage rates have been falling since February this year. Could this have an impact on the increase in interest in rental housing?
Throughout the year, we can anticipate a steady decrease in mortgage interest rates. However, it is highly unlikely that rates will return to a low of 2% seen three years ago. This will make home ownership a bit more economical and accessible. Nonetheless, the appeal of rental housing does not solely hinge on the financial comparison between monthly rent and mortgage instalments. A certain segment of the population, at various life stages, inherently values the convenience and flexibility offered by moving into a fully-furnished unit within an attractive development, with the option to readily terminate the lease and relocate if needed. The reduction in mortgage rates also means a reduction in interest rates on loans for the construction of new rental properties. Consequently, this will lead to the introduction of additional rental housing projects in the market.
Thank you for the interview.
