The Church invests billions in the purchase of apartments and thus becomes a major player in the rental housing market
The domestic church is massively buying new apartments. The most interesting residential projects in Prague and the Central Bohemian Region are in the spotlight. Rental income is intended to help finance the maintenance of churches or support church education. Thus, believers are gradually becoming one of the largest domestic institutional investors.
Public opinion has been swayed in recent days by a scandal involving the Catholic Church, which is accused of excessive conservatism due to the dismissal of priest Marek Vácha from the position of vicar of the Prague academic parish, obstructing new ideas and approaches.
However, there is an area where church dignitaries show an unprecedentedly progressive attitude. Thanks to real estate business and their own brand XPlace, they have already invested billions of crowns in the purchase of new properties.
Income from rental
The fact that such activities pay off for believers is evidenced by the fact that they earn more and more from them each year thanks to rentals. Two years ago it was more than 21 and last year even 32 million crowns. By the end of this year, the church could own up to 550 apartments, which could earn around 160 million. This corresponds to a yield of around 4 percent.
"Our ambition is to gradually offer up to a thousand residential units in the next decade, with a truly diverse range, whether in terms of apartment size, its location or other associated services in the area,"
The economist of the Archdiocese of Prague, Linda Dolečková, stated for LP-Life.
One of the reasons why the church has entered the real estate business is the fact that in 2043 it will stop receiving compensation for unreturned property, which the state is repaying to religious institutions as part of comprehensive property settlements.
Currently, the profits are going to finance the main activity of the church, namely spiritual services, support for church schools, basic maintenance of churches, and support for individual parishes. Every year, according to the economist, they need to earn more than 250 million net. Income from rent is therefore also a welcome injection. Nevertheless, the Archbishopric of Prague argues that its real estate business has a societal impact.
"All the finances we earn from residential rent in XPlace, we give back to the Czech public in the form of services that the church provides to everyone, not just believers. This includes pastoral activities, care for cultural and spiritual heritage, support of educational institutions, operation of schools and kindergartens, or extensive charitable activities, "
states in a press release the general vicar of the Prague archbishopric, Jan Balík.
Rental market is growing
The Church is betting that in the capital and its immediate surroundings, there is still a predominance of limited supply of quality apartments, which is reflected in their rising prices. In addition to rental income, the increasing value of these properties is also reflected in the calculations.
According to current data, average rents in the metropolis at the end of last year climbed for a two-room apartment to approximately an amount exceeding 21 thousand crowns, which is 1100 crowns more than a year ago. For a 3+kk people will pay on average up to 31 440 crowns.
The greater demand for private housing is spilling over from Prague to the Central Bohemian Region. The number of people interested in apartments in central Bohemia has increased about two to five times in the recent period depending on the location. The interest is mainly in apartments with direct rail connections to Prague and a maximum commute of sixty minutes to the city center. Property prices are rising most in cities at the very border of Prague or on the main railway lines.
Cooperation with developers
The church's large real estate ambitions are also reflected in who it cooperates with. Among the developers are many prominent names. These include Penta Real Estate, Finep and Trigema. The church acquired more than 110 residential units of the Waltrovka project from Penta in Prague, a similar number from Trigema in the Smíchov Lihovar area, and just under 60 apartments in the U Šárky complex from Finep. In Central Bohemia's Kolín, it was just under 30 units of the project in Zásmucká street.
In addition to this, the Archdiocese of Prague also operates over a hundred flats in Dejvice. One of the users is also the former president Miloš Zeman, for whom the Friends of Miloš Zeman association rented and converted the premises into an office.
Some of the units purchased are already furnished – for example with their own kitchen unit or built-in wardrobes. The offer also includes parking spaces or commercial units. In some places, there are also additional facilities, such as premises for children's groups and private nurseries.
The Church is gradually building its position as one of the most significant institutional investors in the domestic market. Although more than two-thirds of investment apartment owners are still private individuals, it is expected that the number of institutional ones will gradually increase. Therefore, by 2030, there is expected to be about five times more rental apartments in institutionally managed new buildings on the Prague market than there is now. Currently, it is a share approaching ten percent.
Until recently, it was hard to imagine that the Archdiocese of Prague, considering the number of units leased, could soon be ranked amongst real estate rental players such as AFI Europe or Česká spořitelna.
Sources: original text, own investigation, ČTK, Archdiocese of Prague, Penta Real Estate, Trigema, Finep
