Israelis Eye Czech Republic and Georgia for Real Estate Investments
The Czech Republic, particularly its capital Prague, is emerging as an attractive destination for Israeli real estate investors, according to Amos Ozen, an Israeli real estate agent living in Prague. Ozen highlights the absence of purchase tax on any property, regardless of how many a buyer owns, coupled with steady property value appreciation and a stable economy, as key draws. He also notes the Czech Republic's friendly stance towards Israel.
Ozen explained that while many Israelis visit Prague as tourists and fall in love with the city, a smaller, discerning group invests in its real estate market, typically aged over 30. Investors are interested in various property types, from second-hand apartments in historic buildings in areas like Vinohrady to new builds on the city's outskirts. For first-time investors, Ozen recommends focusing on long-term rentals for greater stability, citing the abrupt halt of short-term rentals like Airbnb during the COVID-19 pandemic.
He detailed average prices for Prague properties: studio apartments (around 30 sqm) suitable for students or young professionals cost approximately 6 million Czech Koruna (about 850,000-860,000 ILS), two-room apartments (around 50 sqm) average 9 million Koruna (1.3-1.35 million ILS), and three-room apartments (around 75 sqm) are priced around 12 million Koruna (1.75 million ILS). Ozen also pointed to the strengthening Israeli Shekel as a benefit, noting an approximate 11% weakening of the Czech Koruna against the Shekel over the past year. Expected annual yields are around 3.5%-4%, with potential for long-term capital gains due to high demand.
While rental income is taxed at 15% in the Czech Republic, this can often be offset against other income. Capital gains tax upon sale depends on the ownership period, with no tax levied after about a decade, though Israeli tax law may still apply. A notable disadvantage is the difficulty in obtaining local bank credit, leading many Israelis to use loans from Israel. Ozen also mentioned that new builds often feature an 85/15 payment plan and lack the construction input indexation common in Israel.
Separately, lawyer Asher Elbaz discussed Georgia as a rapidly growing investment destination. He predicts it will become a top European choice for investors due to its low prices, high tourism numbers (7-8 million visitors annually to a population of 3.7 million), and a sense of security with property registered directly in the owner's name. Elbaz highlighted lower construction costs and faster building times, though he acknowledged potential delays and slower legal processes.
In Batumi and Tbilisi, two-room apartments (bedroom plus living room) in Tbilisi range from $80,000-$100,000 with monthly rents around $1,500, while similar properties in Batumi cost $60,000-$70,000. Georgia has no purchase tax, and rental and capital gains taxes vary. Local banks offer loans covering 50%-60% of property value at 3.5%-4% interest, with rental yields often around 10%-12%. Management companies typically charge about 10% of annual income.
