Prague's housing market is under sustained pressure. Apartment prices rose 8 to 9 percent in 2025, and forecasts expect up to 8 percent further growth in 2026. A housing deficit of around 50,000 units, a 34 percent drop in building permits since 2016, and a 12 percent increase in new apartments sold in 2025 point to ongoing pressure from limited supply and strong demand.

A structural problem, not a cyclical one

The root cause is not a lack of buyers — it is a dysfunctional permitting system. The number of building permits issued in 2025 stood at only around 61,600 nationwide — the lowest figure in 25 years. The New Building Act, intended to shorten the Czech Republic's lengthy approval procedures, has not yet delivered results. For large residential projects in Prague, the path from concept to construction start often takes four to six years. Several major developers have already announced delays to new projects, citing high construction costs and acute labour shortages — further tightening future supply.

The Prague office sector also enters 2026 with historically low new supply, resulting in falling vacancy rates and rising prime rents in central locations. A growing emphasis on sustainability, energy efficiency, and workplace quality is shaping occupier demand.

Where the opportunities lie

Large-scale brownfield regeneration is among the most active investment categories. Key projects include the Bubny-Zatory transformation in Prague 7 — planned for around 11,000 apartments and 25,000 future residents — and the Smichov City mixed-use development, which is actively under construction. These regeneration sites represent exactly the kind of complex, phased urban development where Dutch expertise in spatial planning, sustainable construction, and circular building practices is well established.

The Czech National Bank expects residential prices to grow a further 5 to 10 percent in 2026, with supply constraints keeping upward pressure persistent across the market. For Dutch companies in construction technology, urban planning, affordable housing development, or property investment funds, the Czech market offers a combination of strong fundamentals, undersupplied demand, and a clear need for the kind of innovative approaches to housing delivery that the Netherlands has spent decades developing.

Author: CzechTrade Foreign Office Netherlands

Sources: expats.cz, cushmanwakefield.com, investropa.com