Imagine it is a balmy summer morning. The subtle echoes of the morning traffic and market transactions drift up to your ears as you walk out onto your terrace that overlooks the sprawling town of Brno, Czech Republic. The twin spires of the Cathedral of Saint Peter and Paul pierce the blue sky that stretches on for miles over a colorful, patchwork design of wide, meandering streets, houses, and churches. As you take a sip of your steaming mug of coffee, you cannot help but think what a wise decision you made in investing Brno real estate.
Nestled in the southern, Moravian region of the Czech Republic sits the quintessential European city of Brno. The second largest city in the Czech Republic, Brno boasts a rich array of history and culture. What’s more, the city is also bursting with real estate investment possibilities.
As a whole, the real estate market in the Czech Republic has been on an upswing due to the recovering mortgage rates of 2015 and 2016 after the previous years of financial crisis in Europe. In June of 2016, the average mortgage interest rate was at an all-time low of 1.87%. Consequently, the usual gross yields from apartment rentals ranged between 3%-4% in that year. Since then more and more Czechs have been taking advantage of these prime conditions and investing in real estate in cities like Brno. This attractive trend in mortgage rates has made borrowing easier for potential buyers, which bodes well for international investors like you. The demand for new apartments has increased so much that the supply is just barely able to keep up, which is all the more reason why Brno should be at the top of your real estate investment list.
If this doesn’t make you whip out your checkbook, this new development might tempt you even more: a new consumer loan law passed in November of 2016 has made it easier for potential buyers to find and assess which mortgage plan is right for them. The Czech National Bank now requires banks to inform clients of the total cost, or annual percentage rate (APR), of Czech mortgages, as well as notify borrowers three months ahead of time when their fixation period ends. Additionally, early repayment penalties have been restricted so that borrowers can pay up to a quarter of the total mortgage amount yearly a month before fixation, according to Czech Point 101. It is important to note that banks have spiked their mortgage rates by 0.5% in response to this new law, but most rates still range between 1.54% to 4.52% with an average of 1.94%, estimates Czech Point 101 and numbeo.com.
Still not convinced you should invest your hard-earned money in an apartment in Brno? Let me impress you with a few more notable statistics: according to numbeo.com, rent for a 1-bedroom apartment is approximately $429.43 per month in the city center and $338.75 outside of the city center. The price per square foot to buy an apartment ranges from $152.09 to $198.70 depending on the apartment’s location in relation to the city center. What’s more, the cost of living in Brno is a whopping 57.96% lower than New York City.
What more can you ask for? Favorable borrowing conditions, lower cost of living, abundant history and culture, and a welcoming apartment all await you. Brno is the best decision you will ever make.