Imagine if you had bought property in Prague 8 years ago....
Brno property has been getting a lot of exposure lately. And for
good reason. Attractive deals in Prague are getting harder to
find. Attention is beginning to turn elsewhere.
Brno is the second largest city in the Czech Republic. Being the
business capital of Moravia it boasts some big name companies
such as IBM, Siemens, Minolta CR, Honeywell Controls and FEI.
At the end of March 2005, RyanAir began daily direct
flights from London to Brno. Flights from Dublin to Brno are
rumored to be next on the list of priorities.
In 2008 a major motorway is planned to be completed that will
link central-northern Moravia with Poland making the area more
attractive for Polish investors and traffic.
Currently, property prices are a third of what is available in
Prague and there is a strong and growing rental demand for
quality properties.
What are outside sources saying about Brno? The city of Brno has
won the competition for European City of the Future
2004/2005 which is organized by the prestigious FDI
magazine, a Financial Times publication, in the category of
Visegrad group cities. It even beat out Prague and Budapest.
"Brno's fast economic growth and high GDP-per-capita helped to
push it ahead of other cities in the region. The judges also
gave top marks for its economic potential and recent FDI deals
involving UK-headquartered engineering firm IMI International,
US technology group Honeywell and US advanced engineering
company Danaher Motion, which between them created 900 jobs.
Brno also scored well for its international promotion strategy
and incentives."
Swiss company Aguna chose to build their new plant in
Brno. The company intends to invest almost 250 million crowns
during the first two years. They will be able to employ at least
80 people in production and development of precision
instruments. A large part of the employees will be
college-educated specialists.
"The quality level of the work force was the deciding factor for
Aguna."
"Their representatives are convinced that they will find
engineers in Brno who are just as capable and qualified as in
Switzerland," said Tomáš Bohrn, Project Manager at CzechInvest,
and added: "This precision engineering project demonstrates the
huge potential of Brno as well as the South Moravian region to
attract technically advanced engineering R&D investments."
Daikin Industries Ltd. is a world leader in the
production of modern air-conditioning equipment. After the
double-billion investment in Plzen, the Daikin company has
decided to build a new factory for the production of compressors
into air-conditioners in Brno. In the first stage, the company
intends to invest 1.2 billion crowns and to create more than 500
skilled jobs.
"Our decision to invest at first in Plzen and now also in Brno
is strategic and very important for the future. The Czech
Republic should become the important base for our production for
the fast-growing markets of the European Union," says Jiro
Tomita, General Manager of Daikin Europe, and continues: "The
factory in Brno will deliver compressors to our subsidiaries in
Plzen and in Oostende, Belgium. It is the compressors that are
the most important part and 'heart', which secures the
functioning of air-conditioning units."
Symbol Technologies launched operation of their new
centre in Brno for shared customer support and financial
services for Europe, the Middle East and Africa (EMEA). Symbol
Technologies has already invested more than seventy million
Czech crowns into technological equipment and within three years
plans to set aside another almost half a million crowns for
wages, training and operation. The centre will initially employ
200 people and this number is expected to increase by another
550 employees.
"We chose Brno for several reasons, namely the good offer of
qualified labour, a good site and the good position of Brno in
proximity to Symbol's existing centres and customers in Europe,"
said Steve Priestley, Vice President and General Manager of
Symbol for EMEA. "By concentrating repair, customer call support
and administration of finances, contracts and orders into one
European centre we will be able to improve the overall standard
of our services and keep it at a high level for the long-term."
Austrian-German producer of health care and hygienic products
Lohmann & Rauscher announced publically the end of
December, 2004 that they will build their new plant in South
Moravia. The company is investing more than 41.5 million euros
into expansion and modernization of its production facility here
and will create over 160 new job opportunities.
"While the company in Germany concentrates on a selected part of
health care products like plaster casts and bandages, we are
gradually transferring production of medical dressings,
operating masks and other surgical products to the Czech plants.
Production at the enlarged plant in Slavkov near Brno should be
launched within two years and the main customers will be the
European subsidiaries of Lohmann & Rauscher," said Rudolf Vonys,
procurator of Lohmann & Rauscher s.r.o, and added: "Our final
customers are health care facilities all over Europe, for
example German, French and Austrian hospitals and Dutch, Swedish
and Italian pharmacies."
Japanese Company Ohmori Technos Corporation has decided
to build a new factory in the area of Brno. At the outset, the
company will invest about 15 million euros. Estimations suggest
that at least 150 new positions will be provided in the Brno
area. Production in the new plant is scheduled to start by the
end of 2006.
"Today, the Czech Republic is known as the center of industry in
Europe. In fact, a broad range of Japanese companies have
successfully established their plants in the country. Assessing
these situations, we have decided to carry out this investment,"
commented Fumio Ohmori, president of Ohmori Technos Corporation.
The world's largest airline, Lufthansa from Germany, has
officially committed, as of the end of February 2005, to opening
a new shared services centre in the Moravian side of Czech
Republic. The new centre, which will be located in Brno, will
assist customers of Central and Eastern Europe. It is expected
to employ up to 100 people. This tenth call centre for
Lufthansa, named Global Telesales Brno s.r.o., will start
operations on June 1st 2005.
"Central and Eastern Europe is a strategic market for us where
we plan in the coming years to double the volume of our
activities," commented Stephan Semsch, Lufthansa's Director for
Central and Eastern Europe, and added: "We thoroughly assessed
30 possible localities in total and ultimately chose Brno for
its strategically favourable position within the region and its
proximity to the important airline hubs of Munich and Frankfurt.
Other great advantages of the Czech Republic are its membership
in the EU, quality telecommunications and technical
infrastructure and the motivated, qualified and cost-effective
work force."
Daido Metal, producer of bearings for the automobile
industry, signed an agreement on future agreement on the
purchase of land with the city of Brno today to build a new
production plant. The investment of Daido Metal will amount to
nearly 13 million euro and the plant will employ up to 100
persons in the first stage. The production should be launched at
the beginning of next year.
"The Czech Republic has a very strong position in Europe in the
automobile sector and even many of our clients have their
production plants here. The production of our Czech plant will
cover the demand generated both in the Central European
countries and on the entire continent," says Issei Yoshida,
Managing Director of Daido Metal Europe.
"Our Czech branch, Daido Metal Czech, will be the first company
within the entire group to operate fully independently, without
a strategic partner from the same field. The only partners in
the Czech Republic will be the locals, in particular in the area
of technical engineering and development, We also intend to
cooperate with the city of Brno," says Tetsuro Nishiyama,
Managing Director of Daido Metal Czech s.r.o.
Acer, the major manufacturer in the notebook sector will
opened a new service center, with a related call-center for
customers in Europe, Middle East and Africa (EMEA). The Acer
shared services centre opened on July 1st in Brno, within the
industrial complex Cernovická Terrace and is expected to provide
at least 60 new jobs.
"We have been experiencing great market growth in the last two
years in the countries of Europe, Middle East and Africa. The
new centre will replace the current solution, where customer
service is being provided via external service providers,"
stated Stefan Engel, Region Manager North + Central Europe and
added: "Our goal is to provide even better support to all
countries involved in their native language and double the staff
within one year."
GigaByte Technology, a producer of computer components,
is building a high-tech repair centre in Brno - Cernovicka
Terasa where customers from all over Europe will send their
laptops, graphics cards and motherboards. 25 million CZK is
being invested with a projected 50 employees being required.
GigaByte Technology chose the Czech Republic over the other
Central European countries, including Hungary, which was the
Czech Republic's main competitor. Brno won mainly owing to its
quality infrastructure and sufficient, qualified work force.
The service centre will be built in Brno despite the fact that
the company will not be receiving government investment
incentives. Its executives thereby confirmed that Czech Republic
has a lot to offer foreign investors.
Progeon Ltd, a leader in third party outsourcing in
India, has completed its first phase of its project in Brno. The
company currently employees 80 people in its downtown Brno
office and provides process management services in sixteen
European languages. Future growth plans will eventually offer
career opportunities for hundreds of people from Brno and the
surrounding area.
"The Czech Republic is an attractive destination for companies
like ours that hope to reach a wide European market," said
Akshaya Bhargava, managing director and CEO, Progeon Ltd. "Brno
has excellent infrastructure and facilities, a supportive
government, and people with multiple language skills.
The best quality and most beneficial industrial zones in the
Czech Republic were handed awards by the Czech ministers. The
fifth annual "Industrial Zone of the Year" awards were presented
according to the recommendations of the Ministry of Industry &
Trade and CzechInvest in cooperation with the Association for
Foreign Investment (AFI) and partners in the "Partnership to
Support Foreign Direct Investment in the Czech Republic".
The award for Industrial Zone with the Most Economic
Benefits was given to the "Cernovicka terasa" Industrial
Zone in Brno, while the Zone with the Most Social Benefit in
2004 was the Ostrava Hrabova Industrial Zone - 1st Stage. The
Industrial Zone with the Best Town Planning Solution is being
prepared by a private developer in Ostrava -- CTPark Ostrava,
and the "Brownfield of the Year" was won by the Skoda Plzen
Industrial Zone.
Brno is a city that is going places. All indications strongly
point that way.
But let's see some numbers. What are flats currently going for
in Brno and what could we expect for rental income?
Studio apartment (1 + 1). Seven minute walk to main town square.
One minute walk to trams and biggest park in the downtown Brno
area. Newly renovated apartment in a heritage building. Listed
price 750 000 CZK. Est. Rent: 8000 to 9000 CZK
Two bedroom (3 + 1) flat on Merhautova St. Completely
reconstructed. One minute walk to the trams. Balcony. 90 m2. Big
storage space in the basement. Asking price 1 590 000 CZK. Est.
Rent: 12000 to 13000 CZK
Three bedroom (4 + 1) flat in heritage building. Eight minute
walk to downtown square. One minute walk to the trams. Window
view of the biggest park in the downtown area. Newly renovated.
Balcony off the master bedroom. Around 140 m2. Est. price 2 500
000 CZK. Est. Rent: 14000 to 15000 CZK
At Czech Point 101 we
are not going to hype you with inflated figures. All prices are
based on our analysis of living and working right here in the
Brno market.
One of the most important things about buying investment
properties is the neighborhood you buy into. We can advise on
the current 'hot' areas and those that will be getting attention
in the near future. Contact me at any time, for free, to get
more information about the Brno real estate market or start
progressing on investment properties now.
About the author:
Nathan Brown is the owner of Czech">www.czechpoint101.com/contact.html">Czech Point 101, a
business which helps buyers find their perfect home in the Czech
Republic and complete the purchase. Current projects in which
Mr. Brown is directly involved include commercial and
residential property investments and a portfolio of individual
and corporate business interests in Czech Republic and North
America.
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