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Jan Lobo spoke about the prices of building materials for Hypoindex

Published by: 10.08.2022 10:16:24


Some development projects have slowed down due to expensive building materials. Developers have shifted their interest outside Prague, but regional construction has its advantages and disadvantages. We asked Jan Lob, managing director of K&L Rock, about the market development and whether he would choose a prefab or a new build.


Prices of some building materials are falling, the development market is growing, says expert Jan Lobo



How is the development market at the moment? 


I think that the development market as a whole is still trending upwards, however, it is clear from the behaviour of the large development groups that they are preparing for a possible cooling down of the market.


Are stalled developments starting to pick up again?


If we are talking about major projects, I have not seen a suspension but rather a slowdown, but these projects are still going on. Our group has a new project scheduled to start this fall, so we'll see how things look for us.


Is there a difference between regional and Prague construction? 



Regional construction has its own specifics, among the positive ones I would include faster project approvals or lower land input prices. However, the selling prices are different compared to Prague, so many larger groups focus on Prague or Brno with the cost of building a residential unit often higher than they would be able to sell in that location.


Prague is interesting from a financial point of view and also because of the high demand for apartments, developers had an easy path in sales, the project was usually all sold before construction started.


The long approval processes are definitely a negative. Our legislators should consider legislation to shorten certain approval processes to speed up the renovation and construction of new housing across the country, not just in Prague.


Is building material still as expensive as it was this spring?


The market for material prices is calming down and the segments in question are already starting to fall, I see it as more important that there is material at all, there were months when there was virtually no material at all according to suppliers.



What is the demand for apartments in development projects that are under construction? 


The mortgage market has fallen a lot due to the central bank rates, however, the demand for own housing has not disappeared, it must be said that the purchase of own housing is becoming considerably more expensive.  At this time I observe an increased demand especially for the so-called investment apartments, which are subsequently rented out, compared to the market for the sale of new apartments, the rental market is growing very much.


How do you see the development market developing by the end of the year?


I think it's a short-term outlook until the end of the year, nothing much is likely to change, the question is how the new central bank leadership will start with interest rates and on what basis commercial banks will approve mortgages, and on what terms. If mortgages are more affordable, sales will pick up again, but if mortgages are not affordable it is clear that sales will fall further. This is more of an outlook for the next 12 months.


What would you choose: a larger flat in a prefab or a smaller one in a new build for the same price?"



At this point, due to the energy crisis, I would opt for a newer building with more modern technology. Energy efficiency is a big issue for all clients at this time.  And also because I like new modern buildings.



Find the full article here.


Source: https://www.hypoindex.cz/clanky/ceny-nekterych-stavebnich-materialu-klesaji-developersky-trh-roste-rika-odbornik/


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