CzechInvest Information Series No. 11
Serial No. REA/12/94-11
Date of Issue December 20, 1994
Enviromantal Standards and Legislation
Due to the recent influx of business activity in Prague, the Czech commercial property market -- still in its infancy -- is facing a high level of demand for property in the city centre. As foreign interest in the Czech Republic (CR) continues to increase, a corresponding increase in construction and investment opportunities is expected to raise the supply of available properties.
COMMERCIAL SPACE/OFFICES
In Prague 1, the city's commercial and historic centre, available commercial property includes converted residences, top-quality developments, and refurbished office space.
The new IBC International Business Centre in Prague, for example, offers some 24,000 square meters of modern office and retail space in the city centre for rents of around USD$35.00 per square meter per month. Offices are also available in refurbished period buildings such as the Charles Bridge Centre and Ericsson Palace.
In the nineteenth- and twentieth-century residential areas, changes in the functions of buildings and whole blocks are being considered, such as proposals to develop Vitizne namisti (Victory Square) and to rebuild Bubna station.
Possibilities for property development in Prague are greatest in the city's outskirts. With a large potential workforce, these areas could absorb a great quantity of commercial, cultural, administrative, and even industrial initiatives.
PRODUCTION SPACE/WAREHOUSES
Restitution -- the return of property expropriated by the communist regime to its original owners and their heirs -- is continuing to clarify ownership and ease the process of property acquisition. In doing so, restitution is mitigating the risks previously associated with property acquisition in the CR.
SITES/BUSINESS PARKS
Indicative of future business parks planned elsewhere in the country, the Brno Technology Park will offer over 300,000 square meters of custom-built production, office, hotel, residential, and leisure facilities near the Brno city centre in Southern Moravia, about two hours drive southeast of Prague. The first building is due for completion in November 1994 and will offer 3,200 m2 of offices on three floors with parking and air handling.
There are currently several proposals for industrial and business park facilities around Prague, mainly concentrated around the main highways and the Prague airport.
COMMERCIAL SPACE/OFFICES
In the centre of Prague, rent for office space is between US$30.00-$45.00 per square meter per month. Depending on quality and location, the cost of constructing a city office is estimated at $1,300.00 per square meter.
Outside Prague, rents for office space are estimated at between $12.00-$16.00 per square meter per month.
PRODUCTION SPACE/WAREHOUSES
Industrial space commands rents from $13.00 per square meter per month in Prague to $6.00 per square meter per month outside the capital.
The cost of constructing a warehouse outside of Prague is estimated at $285.00-$350.00 per square meter.
SITES/BUSINESS PARKS
With such a wide price band, companies may wish to contact CzechInvest for a regional breakdown of typical land costs and ground rents.
All companies and individuals owning property are subject to the Real Property Tax No. 338/1992. For industrial properties, tax is calculated as 5 Kc per square meter x land area x location coefficient. For other properties, a rate of 10 Kc per square meter is substituted into the same calculation.
Population of Location Village/City Coefficien t up to 300 0.3 300-600 0.6 600-1,000 1.0 1,000-6,000 1.4 6,000-10,000 1.6 10,000-25,000 2.0 25,000-50,000 2.5 more than 50,001* 3.5 Prague 4.5
*Also includes Frantiskovy Lazne, Luhacovice, Marianske Lazne, Podebrady and Alice Rychetnikova.
Property tax statistics courtesy of Coopers a Lybrand
Rent for non-residential property in the CR is subject to a 5% VAT (with the exception of banks and foreign representational offices).
The Czech Republic has an extensive rail network. Most international lines connect at Prague's Hlavni (main) and Holesovice train stations. For enquiries regarding rail freight call 2161 1111.
Prague's Ruzyne airport services domestic and international flights, with at least three daily flights to and from most major European cities; New York is serviced by three direct flights each
week and by daily flights via Frankfurt. Other domestic airports are located in Karlovy Vary, Ostrava, and Brno. For general information, call 367 760; for enquiries regarding air freight call 334 1111.
Several projects are currently underway to improve the Czech Republic's road network. These include the improvement of road surfaces on major transit routes (to be completed by 1996) and the construction of by-pass roads around several cities.
In November 1993 the Czech government approved a programme aimed at accelerating highway and motorway construction. This 12-year programme will provide for the commission of 987 km of new highways and motorways to be linked to the European transportation network, increasing truck transit capacity and connecting all major Czech cities with high-quality roads. In Prague, the city government has drafted the construction of inner and outer ring roads to keep traffic out of the city centre and create a direct link to highway junctions for Brno, Vienna, Nuremberg, Dresden, and Berlin. Plans are also underway to expand Prague's metro system further into the suburbs.
Due to the sudden increase in commercial activity, Prague's telecommunications system is currently expanding to meet demand. It is anticipated that by the year 2000, there will be a 35-40% increase in subscribers' lines, with 75% of the network digitised, 70,000 data stations, 170,000 public radio-telephone stations, and 165,000 fax subscribers.
Local telephone calls cost 1.6 Kc, regardless of time of day or length of call. Cost varies for international calls; for example, a one-minute call to the UK costs 32 Kc (about $1.00), and to the USA 63 Kc (about $2.00) .
Prague is supplied with natural gas, electricity, and solid and liquid fuel. Its district heating system, using solid fuel, is typical of most East European cities. Future plans to use natural gas allow for access to energy sources outside the city.
A major nuclear power facility is being developed at Temelin, in Southern Bohemia, which will complement the existing 440 MW x 4 nuclear plant at Dukovany in Southern Moravia.
ENVIRONMENTAL STANDARDS AND LEGISLATION
The Czech government is currently addressing the environmental difficulties associated with the former regime's structural industries. Proposals for environmental reform have been developed to run parallel with economic reforms, including such incentives as tax breaks, lower interest rates, and custom duty exemptions for activities leading to environmental improvements.
For firms in which at least 40% of the capital is owned by foreign investors, there is no liability for environmental damage caused prior to foreign investment in the firm. In such cases, the Czech National Property Fund will assume responsibility.
CzechInvest wishes to thank Price Waterhouse (tel: 2421 7483) for their contribution to this fact sheet.
NOTE: This information is current as of December 1994. Although we have made every effort to ensure the reliability of our sources, CzechInvest does not assume responsibility for its accuracy.