Investments in small apartments have the fastest return in Prague

In Prague, the fastest return on investment is in rental apartments between 20 and 40 square meters. The money invested in buying properties of this size is currently paid back in 25 years, and the apartment is rented out in about a month and a half. The most expensive rental apartments are located in Prague 1, 2, and 5, the most central areas of the city. Despite the highest prices in Prague in the entire Czech Republic, investors consider the capital a profitable place to live.

Rents

It is therefore demonstrated that, in the capital, the smaller surface area apartments ensure a faster return on investment, especially in central areas, where apartments are rented out quickly. However, this cannot be said for apartments of 120 square meters or more. In fact, for such apartments, the average tenant search time exceeds 60 days.

The profitability of an apartment depends on many parameters, including the condition and layout of the interior space. Still, on average, an apartment of 20-40 square meters is rented for about 15.000 CZk.

Indeed, apartments with an area between 60 and 80 square meters are rented at an average of 23.000 CZK, and the return on investment generally occurs after 30 years. To complete the analysis, it is then necessary to provide information on apartments of 120 square meters and above, the average rental price of which is around 32.000 CZK and the estimated return on investment is 55 years.

Going into more detail about the different areas of Prague, it becomes apparent that rental prices tend to be more expensive in Prague 1 and Prague 2, due to their centrality, and Prague 5, due to the high demand, attributable to the many job opportunities in the area. In Prague 1, the average rent per square meter is 524 CZK, a price that drops to 498 for Prague 2 and 437 for Prague 5.

Sales

According to some recent analysis, it appears that the prices of older apartments in the first quarter of 2024, increased from 4% to 13% in almost all major Czech cities.  The average selling price in the Czech Republic is nearly 61.000 CZK per square meter, a full 4, 6% higher than in 2023. This price increases considerably in Prague, where, for the first three months of 2024, there was an average price of 125.400 CZK per square meter, a full 4.000 CZK more than at the end of 2023.

In conclusion, the analysis of the housing market in Prague highlights the profitability of investment in real estate.  Indeed, real estate investment in the Czech capital offers attractive return opportunities, with a clear trend toward smaller apartments for faster payback on investment. In the central areas of the city, smaller apartments between 20 and 40 square meters enjoy high demand, which allows them to be rented out quickly, resulting in a return on investment within, on average, 25 years. Indeed, larger apartments require a longer tenant search period, which also leads to a longer return on investment, with time frames exceeding 55 years for properties over 120 square meters.

Sources: https://www.patria.cz/