In a surprising move, Dušan Kunovský, the owner of Central Group, has decided to lower the prices of new apartments in Prague, marking a rare moment in the Czech real estate market. The decision to reduce costs applies to newly built apartments in the Harfa project, a completely new development that has not yet been completed.
This is a significant departure from the trend of recent years, in which prices for older properties on the outskirts of Prague or inefficient buildings from the first republic have fallen. In contrast, the prices of new apartments remained relatively stable.
The country’s most prominent developers have been asserting for at least the last year that there is no such thing as price reductions in their segment, making Kunovský’s move all the more significant. The Central Group’s new Harfa Living project in Prague 9 has lowered prices by an unbelievable 25% compared to the average market price.
The company has stated that the prices for 1+1 apartments in the initial phase range from 3.6 to 4 million CZK, while 2+1 flats are priced between 5.4 and 6 million CZK. These prices are approximately 25% lower than other developers currently charge for new apartments.
While Central Group has labeled these as “introductory prices” that apply only to the first fifty units sold, it still represents an unprecedented move, especially given that the country’s largest builder of new apartments is behind it. However, it remains to be seen how the market will react to Kunovský’s move, and the developer himself is reportedly concerned about the broader implications of this “starter” discount.
According to Newstream, Central Group has responded to the increasing unaffordability of housing due to high prices for new apartments and costly mortgages by securing preferential pricing from building materials suppliers and offering many flats. Kunovský stated in a press release that the company has been able to provide preferential pricing due to its system of streamlined construction with high repeatability and large building volume, as well as its Economy standard.
The Czech real estate market has seen a significant drop in the prices of older apartments, according to an analysis by FérMakléři.cz, with the average cost of more senior apartments dropping by approximately 11% year-on-year in the first quarter of 2023. A sixty-square-meter apartment in Prague has fallen in price by about half a million CZK after renovation, making it an excellent time to purchase such a property.
In addition to lowering prices, some of the top players in the Prague residential market are turning to build low-cost rental properties for the city. With the city’s population growing, the demand for affordable housing is increasing, and developers hope to meet this demand with new construction. This shift represents a departure from the luxury labels attached to high-end properties in attractive locations and a response to the growing demand for affordable housing in the city.
The decision by the Central Group to lower prices for new apartments in the Harfa project represents a rare occurrence in the Czech real estate market. While other developers have been increasing their prices for new flats, Kunovský’s decision to lower costs is a significant move likely to have implications for the broader market. With developers looking to meet the growing demand for affordable housing in the city, it remains to be seen how the market will continue to evolve.