“This is a pioneering operation in the Czech Republic, the first large-scale affordable housing project led by a private company without public subsidies or public land."
On an early weekday morning in Prague, nurses finish nightshifts, teachers prepare their first lessons and police officers begin patrols across the city. Many start the day in the same way: boarding crowded trams or buses for long commutes from the outskirts of towns, where rents are within reach.
Living closer to work has become more and more difficult, as rising prices leave little room for people to make choices. For the public-sector workers who keep the city running, housing is one of the most pressing challenges.
A new project in Prague is giving public employees access to energy-efficient homes in good locations in one of Europe’s fastest-growing capitals. Česká spořitelna, one of the Czechia’s leading banks, is financing more than 1000 affordable homes in the city. The European Investment Bank is offering a €60 million loan for the project.
First big, private affordable housing project in Prague
A subsidiary of Česká spořitelna, known as Affordable housing of ČS (DBČS), is handling the development of the housing. Optimized rental units will offer long-term leases to around 50 000 nurses, health care personnel, teachers and other essential public sector workers.
Rents are kept around 20% below market levels thanks to economies of scale, an efficient tenant onboarding process and a high occupancy rate, which together reduce overall costs.
The approach is similar to an affordable housing model in Austria, where the European Investment Bank gave loans to Erste Bank over several years to offer subsidised and affordable housing.
A pilot project for Czechia
Housing has become the number one social challenge in Czechia with an annual average income multiple of 14.6 required to purchase a 60 m² apartment. This is the worst ratio in the European Union.
“Housing affordability is a pressing issue in Prague and across the Czechia. That’s why we are committed to helping address this nationwide challenge,” says Tomáš Salomon, chief executive at Česká spořitelna.
The Czech government views such initiatives as an important step toward shaping a national affordable housing plan. “We believe that scaling of affordable housing solution is in unlocking the potential of capital markets, especially pension funds combined with EIB financing”, says Marek Blaha, CEO of DBČS.
“This is a pioneering operation in the Czech Republic, the first large-scale affordable housing project led by a private company without public subsidies or public land," says Kamil Dörfler, senior urban development specialist at the European Investment Bank
Under the Invest EU Advisory Hub, an EIB Advisory team has also helped the Czech government develop a national framework for affordable housing. This loan was part of that plan.
Energy-efficient and built to last
Besides the low rental fees, the buildings will be energy efficient. Some buildings will include climate adaptation measures such as green roofs, rainwater collection systems.
The design reflects Prague’s changing climate, with hotter summers and more irregular rainfall. Durable materials and straightforward maintenance are intended to make the homes easy to live in and affordable year after year. High-quality insulation will reduce electricity use and lower costs for residents.
CSAS - PRAGUE AFFORDABLE HOUSING
The operation is a framework loan to Ceska Sporitelna a.s. (-CSAS-, acting as borrower) and its fully owned subsidiary, Dostupne bydleni Ceske sporitelny a.s. (-DBCS-, acting as promoter) to develop affordable housing projects in Prague, Czech Republic. The project envisages over 700 newly constructed housing units, to be operated on long-term affordable basis (below the market price) and rented out to key workers such as nurses, teachers and public sector workers and it is the first project of
