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| Luxury apartments on the Vltava River |
Prague’s old riverfront industrial areas – Holesovice and Karlin – have been the city’s neighbourhoods of the future for almost a decade now, as redevelopment plans have been dealt blows first by nature and then by the global economy.
First, the areas were drowned in a devastating flood in 2002, which delayed many redevelopment plans. Then, just as builders were restarting projects, the country’s real estate market was hit by the global recession, putting some buildings on hold and forcing developers to cut prices elsewhere.
However, that has not stopped the two districts from becoming an attractive alternative. Both lie about 15 minutes’ walk from the Prague of gothic townhouses and cathedrals that attracts tourists from all over the world. But there is nothing twee about Holesovice and Karlin and this is just what is making both areas an interesting proposition for people seeking a grittier urban area close to the centre of the city.
“It’s the same story as in London, New York or Berlin: you have creative people looking for cheaper locations,” says Leos Valka, the director of Dox, a new modern art museum recently opened in Holesovice, his voice occasionally drowned out by the roar of a crane as workers mount a huge art installation called “Europe Entropia”, by Czech artist David Cerny, which pokes fun at the various nations in the European Union. The museum is housed in what was once a sheet metal factory. “Industrial space is very romantic,” Valka says.
In the late 19th century both districts were home to a mix of residential properties, some of them upscale, and smaller factories, including slaughterhouses and vegetable markets. After the Communists seized power in a 1948 coup they instituted their traditional policy of putting large industrial projects close to the heart of ideologically suspect cities. Holesovice, a flood-prone peninsula surrounded on three sides by the Vltava River, bore the brunt of the policy and quickly became dominated by smokestacks, an important railway line, and later a highway that cut the neighbourhood in half.
However, the neighbourhoods were also connected to the Prague metro, which played a crucial role in their later revival.
After the end of Communist rule in 1989 developers with an eye towards the future began to see the possibilities of both Holesovice and Karlin. Serge Borenstein, a Belgian, was in Prague working for a billboard company and would frequently cross through Karlin, a forgotten area of warehouses, a run-down port and dilapidated buildings cut off from historic Prague by a highway. “It was a devastated industrial area at the time,” he says.
Together with a partner and with money from controversial US financier Marc Rich, Borenstein snapped up large chunks of Karlin, including several hectares of riverfront. After redeveloping several office buildings, his company, Real Estate Karlin, has grand plans to remake the whole riverbank into a mixed-used office and residential project.
On the other side of the Vltava in Holesovice Israeli investor Tamir Winterstein helped set up Lighthouse Development, which leased 16 hectares of waterfront land for a mixed-use development.
The floods of 2002, which left the land along the sharp bend submerged under more than 2 metres of water, put paid to many ambitious development plans. “After the flood, the city issued no building permits for almost four years as it built floodwalls,” Borenstein says.
However, the deluges did have one positive effect on the local real estate market. They so damaged many of the poorest areas of Prague that tenants were forced to move out of waterlogged buildings and owners began to renovate them, turning many into lofts and attractive apartments.
On the streets, small vegetable stands and traditional Czech beer bars began making way for locations such as La Fabrika, an industrial space used for art shows and exhibits, the Mecca dance club and the Molo 22 restaurant.
“Four years ago it was still difficult to get a good lunch here and by six or seven in the evening the streets were empty. It was a sad part of the city,” says David Reznicek, owner of Konsepti, a high-end designer furniture store in Holesovice. He opened his shop in 1999, taking over a small factory that had made metal tanks and containers. One of the old factory’s smokestacks still marks one side of Konsepti’s interior courtyard. “We immediately understood it was a fantastic building,” he says. “We were one of the first to come here. When I saw the neighbourhood, I knew it would be developed but I thought it would happen faster.”
On the streets outside Konsepti secondhand clothing shops jostle for space with Italian boutiques, small arty furniture shops and offices of architects and graphic designers, a sign of the changing texture of the neighbourhood. A few hundred metres away an old brewery has been converted by ING Real Estate into offices and luxury apartments, a project developed by CMC architects. The old buildings blend with the new to form a courtyard, taking advantage of the area’s enormous industrial-sized city blocks.
David Chisholm, one of the architects responsible for the brewery conversion, is also working with J&T, a local developer, on an ambitious project to build a mixed-use development in Holesovice on one side of the Libensky Most, one of the bridges crossing the river into the neighbourhood. Their hopes of building a series of structures, including a 25 storey tower, along the river have aroused controversy, as urban preservationists fear it could overshadow the nearby historic heart of Prague. “It’s the lowest position in the city, so it won’t overwhelm the rest of Prague,” says Chisholm. But J&T is still waiting for permission to begin its Tower City plan.
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| A recently opened museum of modern art |
However, its plans to create a city within a city comprising offices, apartments and even a university in a project spanning at least a decade have been complicated by the company’s financial troubles caused by the sharp downturn in the region’s property market. In the first half of this year, Orco reported a €199m loss and high-profile projects, such as a Warsaw tower designed by US architect Daniel Libeskind, have been mothballed.
The slowdown in the Czech property market has also hit other developers. “Everyone has stopped projects but there could be demand again in two years’ time,” says Martin Kodes, sales director for J&T.
Borenstein’s company recorded no apartment sales in the first three months of this year before interest picked up slightly in the spring. He says that it has also become much more difficult for developers to finance projects. Before the crisis banks would require a project to have about 20 per cent pre-leasing in order to get financing. Now banks require 40 to 70 per cent and have doubled their margins. Projects already on the market, such as the River Lofts residential complex developed by Daramis Group, have seen price cuts of about 10 per cent.
Prokop Svoboda, partner of Svoboda & Williams, a Prague real estate agency, says prices in Karlin and Holesovice have fallen 10 to 20 per cent in the past year, with luxury apartments now listing for about Kcs80,000 (€3,140) a metre and flats in unrenovated buildings at just over half that amount.
Until a year ago foreign investors were driving a lot of the demand at the high end of the market. However, they are now mostly gone and those few buyers in the market are mostly Czechs looking for a place to live.
Over the long term, Svoboda thinks that buyers will still do well, with price rises resuming once the economic situation stabilises. Borenstein hopes that flats in his River Gardens complex will sell for Kcs100,000 a metre in two years, 20 per cent more than today.
Vladimir Bystrov, a marketing executive who has lived in Holesovice for a decade, says that the area’s attractions and relatively accessible prices make it a good option for other urban professionals. “A lot of my friends are looking to move here,” he says. “They know that right now it’s not so expensive but in a few years it will be out of reach.”
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Developers
ING Real Estate, tel: +420 221984310 www.ingrealestate.cz
Lighthouse Group, tel: +420 234379200 www.lighthouse-prague.cz
Daramis Group, tel: +420 236080346 www.daramis.com
Estate agencies
Real Estate Karlin, tel: +420 266727611 www.karlin.cz
J&T Group www.jtfg.com
Svoboda & Williams, tel: +420 257328281 www.svoboda-williams.com
