Institutional rental housing is gaining popularity.

Institutional rental housing is gaining popularity.
Rental housing in Prague has experienced a significant increase in recent years. The shortage of affordable and available apartments for sale has led to a boom in the construction and rental of housing units. Large investors and development companies are coming up with solutions to cope with the growing demand while providing greater security and a wider range of services compared to individual landlords.
It is expected that around a thousand new rental apartments will be added in Prague annually. This trend represents the biggest change in the housing market in the last thirty years. Over the past three years, the number of rental apartments operated by investors in Prague has more than doubled, with nearly five thousand currently in existence and with additional thousands expected in the near future.
International institutional investors are also showing interest in the Czech market, recognizing its potential and the increasing demand for rentals. Most major local developers are incorporating rental apartments into their plans. One location experiencing growing demand is Brumlovka, where Passerinvest is developing mixed-use construction and building rental apartments. The uncertainty and complications associated with homeowners' associations in individual ownership have prompted developers to choose rental housing construction.
There are also developers who specialize solely in construction and do not take over the operation of rental apartments. This creates space for large investors and specialized funds that have been involved in rental housing for several years. This new segment of the market aims to provide affordable housing with lower rents than the regular market. Rental housing construction offers higher quality, provided services, and lifestyle, and is becoming increasingly attractive, especially due to the inaccessibility of mortgages and rising property prices.
In 2022, a record number of over 39,400 apartments were completed in the Czech Republic, making it the most successful year in the last 15 years. However, this year is expected to see a slowdown in construction, as the number of initiated apartments in January and February decreased by 6.5% compared to the previous year. This trend is primarily driven by high apartment prices and the inaccessibility of mortgage loans, leading people to seek rental options.
In response to the growing demand for rental housing, new development projects focused on rentals are emerging. This can involve either partially incorporating rentals into originally intended sale projects or creating projects with a primary focus on rentals. This creates a separate segment in the rental housing market, which significantly differs from the traditional secondhand market, particularly in terms of overall quality of offered apartments and provided services.
Rental housing in Prague and the entire Czech Republic is gaining more trust and attractiveness among residents. It offers greater security for long-term rentals and provides services and amenities that cater to modern lifestyles. With the increasing demand and development of new rental projects, further dynamic growth can be expected in this segment of the housing market in the Czech Republic.
Overall, government support for rental housing can be a step in the right direction if it is properly designed and implemented. However, it is important to monitor how the housing market situation will develop in the long term to avoid any negative consequences and to ensure that public money is used efficiently and to the benefit of society as a whole.
Source: ekonom.cz, Asociace nájemního bydlení, E15.CZ, faei.cz