A Reversal of Fortune: Construction Bounces Back

After a sluggish start too the year,the Czech construction industry is experiencing a surprising resurgence.Initial data suggested another year of struggle, with completed apartments down by over 40% year-on-year and new projects declining by nearly a third. Though, the arrival of spring has brought a significant turnaround, injecting new life into the sector.

Significant Growth in Construction Output

Recent figures from the Czech Statistical office reveal a considerable increase in construction production. March saw a 12.1% rise compared to the previous year. The first quarter as a whole experienced a 7.4% increase, marking a 3.4% betterment over the preceding three months. Warmer weather conditions are cited as a contributing factor to this growth.

the end of the first quarter brought pleasing data from the construction industry. From the point of view of the construction of the building sector, march figures have been given us to the highest values ​​in the last three years.

Jan Vejmělek, Construction Analyst

Driving Forces Behind the Expansion

Both civil engineering (+9.1%), fueled by infrastructure growth, and ground construction (+6.8%) have contributed significantly to this positive trend. This sudden upturn is attributed to a confluence of factors. Companies are responding to the escalating demand for both residential and industrial properties. While this demand has been present for some time, the preparation phase for projects is now culminating, with activity accelerating with the onset of spring. Such as, government initiatives aimed at modernizing transportation networks have spurred significant investment in infrastructure projects, boosting civil engineering activity.

Residential Construction Gains momentum

The construction of new housing is also playing a crucial role in the industry’s growth. In the first quarter, construction began on 8,297 new apartments, representing a 2.9% year-on-year increase. This surge in residential construction is especially noteworthy given the ongoing housing shortage in major urban centers.

March figures on the development of housing construction look very promising. Not only did it compensate for a slip from the beginning of the year, but also confirmed that in some parts of the country there is a boom in the construction of apartments.

Petr Dufek, Chief Economist at Creditas

Regional Hotspots: Prague, Central Bohemia, and South moravia

Geographically, the construction boom is concentrated in three key regions: Prague, the Central Bohemian Region, and the South Moravian Region. Prague’s leading role in construction is particularly encouraging,suggesting that the growth is not limited to Brno,as has been the case in the past,but is expanding to other major regions over time. This widespread growth indicates a more lasting and robust recovery for the construction industry.

Future Outlook: Continued Growth Expected

A survey by the Association for the Development of Property Market confirms the positive outlook. Approximately one-third of builders anticipate a significant increase in new projects for sale in the coming year. This optimistic forecast suggests that the current growth trajectory is likely to continue, further strengthening the Czech construction industry.

Residential Development Booming

The Czech Republic’s construction industry is showing strong signs of recovery, particularly in the residential sector. Major developers are reporting record-breaking interest and are ramping up construction to meet the growing demand for new apartments, especially in key urban centers like Prague and Brno.

Ondřej Šťastný of Central Group, the Czech Republic’s largest residential developer, While about three years ago we postponed some of our projects due to the sharp rise in the prices of building supplies, interest rates and the decline in demand, but we currently have record -breaking. Central Group currently has over three thousand apartments under construction throughout Prague and plans to commission approximately 1,800 apartments this year.

brno’s Construction Market Thrives

the city of Brno is also experiencing a surge in construction activity. According to a recent analysis by Traikaya,developers in Brno sold a total of 479 new apartments in the first quarter of 2025,marking the highest sales volume since the second quarter of 2021. This robust demand is driving further construction projects in the region.

Industry Optimism Despite Initial Dip

While the total number of completed apartments has seen a temporary decrease of 17% year-on-year, the increasing number of new projects suggests this is a short-term fluctuation. A survey by CEEC Research indicates strong optimism within the construction industry, with 77% of companies expecting growth this year and 78% anticipating further expansion in the coming year.

Michal Vacek, director of CEEC Research, The construction industry is waiting for a good year, our prediction is positive.

Companies Report Increased Workload

Development companies like Trigema are also experiencing a positive shift.Radim Sponar, Building Director at Trigema, confirms that previously suspended orders are now active, leading to a greater workload. We have more work contracted,the suspended projects have started, says Sponar.

New Orders Reflect Growth

The value of new orders in the construction sector reflects this positive trend. Building companies with 50 or more employees secured contracts worth nearly CZK 100 billion during the quarter, a 15% increase compared to the previous year. This surge in new orders underscores the growing confidence and activity within the industry.

Permitting Delays: A Persistent Obstacle

Despite the overall positive outlook, the Czech construction industry continues to face significant challenges, particularly concerning slow permitting processes. These delays hinder developers’ ability to respond quickly to market demand and can prolong project timelines.

michal Pich highlights that The problem remained unchanged – very slow permit processes. This ongoing issue remains a major concern for developers, impacting their ability to efficiently meet the growing demand for housing and other construction projects.

In March, the approximate value of buildings for which permits were issued reached CZK 41.2 billion, a 37.2% year-on-year decrease. While this decline is partly attributed to a high comparative base from the previous year, it also reflects the impact of slow permitting processes on the overall volume of construction activity.

The Unrelenting Ascent: Apartment Prices in the Czech Republic

The Czech Republic’s housing market continues to grapple with escalating apartment prices,a trend fueled by robust demand clashing with a constrained supply. While experts anticipate further increases, there’s a glimmer of hope that the rate of growth might decelerate in the near future.

Supply and Demand Dynamics: The Core of the Issue

The fundamental driver behind the price surge remains the imbalance between the number of prospective buyers and the availability of apartments.This scarcity, particularly in major urban centers like Prague and Brno, intensifies competition and pushes prices upward. According to recent data from the Czech Statistical Office, demand for housing has outpaced new construction by a significant margin for the past several quarters.

Construction Costs and Billion-crown Projects

Large-scale construction projects, especially those exceeding a billion crowns in budget, are facing cost pressures that mirror conditions observed earlier in the year. This impacts the overall affordability and availability of new housing units.

For buildings with budgets above a billion crowns, the indicative value would be at the level of last March.

Radek Matějka, Director of the Department of Agriculture and Forestry, Industry, Construction and Energy CSO

A Glimmer of Moderation? Expert perspectives

despite the upward trajectory, some analysts suggest that the rate of price increases could slow down. This potential moderation hinges on various factors, including government policies aimed at stimulating construction and addressing supply-side bottlenecks.

While the rise in the price of apartments will not stop, there is optimism that it can moderate faster.

Navigating the market: Advice for Buyers and Investors

In this challenging market, prospective buyers and investors need to exercise caution and conduct thorough due diligence. Consider exploring alternative locations outside major city centers, where prices may be more reasonable. Additionally, staying informed about government initiatives and market trends is crucial for making informed decisions.

Looking Ahead: The Future of Czech Housing

The long-term outlook for the Czech housing market remains uncertain. Factors such as interest rates, economic growth, and demographic shifts will all play a role in shaping future trends.Addressing the supply shortage and promoting sustainable development are essential for ensuring affordable housing options for all Czech citizens.