Prague property investment prospects would appear to be going from strength to strength. According to a real estate forecast by the Urban Land Institute (ULI) and PricewaterhouseCoopers LLP, the city's real estate market now has better investment and development prospects than London. The Emerging Trends in Real Estate Europe 2008 forecast puts Prague as the highest ranked city in Central Europe for investment prospects. It also concluded that Prague was a 'positive' market, with combined buy-hold ratings of 80 per cent plus for all asset classes.

"In the Czech market and other central European markets there is increasing consensus around their status as mature markets with high stability and a lower investment risk," says Glen Lonie of PricewaterhouseCoopers. "This situation attracts some of the more conservative investors to the region."

But the stability of Prague property doesn't diminish the returns that investors can expect. According to Knight Frank, property prices in the city rose 7.5 per cent in the last 12 months, with high-end Prague property showing returns of 9 per cent. Liam Bailey, head of research at Knight Frank, anticipates growth of 5 to 10 per cent per year for the next two years, based on studies by Knight Frank. He also expects high-end market growth due to restrictions in supply.

"The mortgage market in Prague didn't mature until about five years ago," says Bailey. "This, along with political changes and the luxury market taking off, are keeping the market strong."

Those looking to take out a mortgage in Prague will need to get a bank appraisal – but Jaroslav Zizka, director of sales at Svoboda and Williams, warns that this may be very different from the asking price for previously owned homes. For older homes, he says that the appraisal can be as low as 50 per cent of the market price. This has encouraged many buyers to consider purchasing new or off-plan Prague property in order to obtain full mortgages.

"We have been selling Prague property off-plan for a number of years now," says Damian Qualter of BuyProperty4less. "We have seen massive increases in prices in recent years and demand is still strong. " He advises investors to "buy in the right areas. Know what is included in the price and use UK-speaking experts – but apart from that I feel off-plan Prague property offers excellent prospects for those who are properly prepared."

Pragueproperty4less is currently marketing a number of plots in Prague and the surrounding area from £34,000. For those who wish to get in on the Prague property phenomenon without breaking the bank, Prague Property is also offering the chance to invest in city centre developments for as little as £7,000.

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For more information visit:
www.pragueproperty4less.com
www.pragueproperty.net
www.pwc.com
www.knightfrank.com
www.svoboda-williams.com

Article first published 6 August 2008