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Investing in the Czech Republic - Outside of Prague - Part 3: Ostrava Property
In the North American school system students seeking to be the
best strive for an 'A' grade. However, the school system is not
the end of the drive to be the best and earn an 'A' grade.
Letter grades are used by rating agencies to rank communities in
terms of investment risk.
Ostrava, in recent times, received an 'A3' grade from Moody's
Investors Service.
What does this mean to you as a potential investor? What are
the other indicators which would point to the health and
prospects of Ostrava's property market?
What does this rating actually mean?
There are 25 rankings from Moodys in the investor services, an
'A3' is seventh from the top and is defined as an upper-medium
grade. A similar grading company, Standard and Poors, also gave
Ostrava an 'A' ranking based on their grading system.
What will that mean for the city?
Some investors will only look at cities with 'A' ratings. It is
an indicator of the financial and fiscal health of the community.
Since the restructuring of the industry in the 1990s, the
economic platform of the city has changed substantially. In
fact, most of its incomes are no longer dependant on local
economic conditions.
Ostrava, in receiving this rating, achieved the identical level
of rating as other mid-sized cities in Central Europe. Brno, for
example, also received an 'A3' rating (for a complete discussion
of Brno property and economic developments visit our feature on
Brno property.)
Let's go through some other indicators as to the investment
potential for this Northern Moravian city.
Area: 214 km2
Population (latest data April, 2004): 315 000
Road Distance from important European and Czech cities:
City / kms Brno / 170
Olomouc / 93
Prague / 360
Vienna / 310 Bratislava / 300 Warsaw / 300
Budapest / 389 Berlin / 540
Paris / 1 500
With the completion of the D-47 highway the infrastructure
capacity will greatly increase as well as the ease of travel.
Travel time to the Czech capital, Prague, will be shortened to a
little over three hours.
Air Transportation:
Ostrava - Mosnov International Airport is located 25 km from
the city centre. It is the biggest regional airport in the Czech
Republic with a capacity of more than one million passengers per
year (current actual figures are just over 200 000 per year and
expected to triple next year) and a runway 3500m in length and
63m wide, allowing it to accommodate the world's largest
airplanes. Currently it caters to both domestic and
international flights.
Although there are currently not any well-known low cost
carriers flying into Ostrava we expect it will only be a matter
of time.
Average monthly salary for Ostrava region (2004): 18 966 CZK
Average monthly salary for Czech Republic (2004): 18 582 CZK
Average monthly salary for Czech Republic (2005 2nd Q): 18 763
CZK
Education: 16.3% of residents in Ostrava have University level
education compared to 9.4% Czech wide.
Average temperature in January: - 2°C to -4°C Average
temperature in July: 15°C to 19°C
(hey, some investors want to know this....)
Economy:
Industrial production has always had a strong factor in the
economy of the Ostrava region. Mainly its been based on the
excavation and processing of coal and on related branches -
metallurgy, the coking industry, the chemical industry, electric
power generation, civil engineering and heavy engineering.
Metallurgy and heavy engineering remain the largest employers in
the City.
Some of the Largest Employers in Ostrava
Employer / Business / Activity / Employees (Jan. 2004)
Mittal Steel Ostrava a.s. / Metallurgical production,
manufacture of metallurgical and engineering final products / 10
968
Faculty Hospital / Healthcare / 3 180
Czech Railways / Transportation and communication / 3 075
Vitkovice Machining / Machining and Metallurgy / 2 697 Vitkovice
Steel / Metal production, processing / 1 682 Ostrava Blast
Furnace / Metals and coking-chemical production / 1 305
Foreign Investors in Ostrava (by no means comprehensive,
only a sampling)
Investor (Country) / Business Activity / Employees (Jan.
2004)
Mittal Steel Ostrava a.s. (UK) / Metallurgical production,
manufacture of metallurgical and engineering final products / 10
968
Vitkovice Tube Mill, a.s. (Cypress) / Steel tube production / 932
Dalkia Ceska republika, a.s.(France) / Heating and Electrical
Production / 697 BorsodChem MCHZ, s.r.o. (Hungary) / Chemical
production / 623 Tesco Stores CR a.s. (UK) / Retail / 580 Ahold
Czech Republic, a.s. (Holland) / Retail / 529 Hayes Lemmerz
Autokola, a.s. (USA) / Production of car wheels and automobile
parts / 410 Ostrava Water and Sewage, a.s. (France) / Production
and delivery of drinking water, removal and cleaning of waste
water / 382 Trefil a Schomberg, s.r.o. (Germany) / Plastics
production / 339
Hayes Lemmerz Alukola, s.r.o. (Italy) / Automobile parts
manufacturing / 310 Connex Morava a.s. (Czech Republic/France) /
Road transportation / 212
Other Investment News
US based Roper Industries Inc. has decided to invest 24
mil. CZK over the next five years into a new technology centre
in Ostrava where it will create 18 highly qualified jobs.
"In Ostrava we will be focusing on projects for the development
and innovation of our laboratory instruments. The Ostrava centre
will supplement the technology centres of our existing
Instrumentation Segment operations located in the U.S., Denmark,
Germany and France employing in total almost 1000 people,"
commented Will Crocker, Roper's Vice President and Group
Executive for the Instrumentation Segment. "The laboratory
instruments produced from the design work there will serve
foremost our materialography and physical property testing
markets. The results from the product development in Ostrava
will be utilized by our segment's production plants abroad
where
they will produce the final products."
The new customer support centre of GE Money Multiservis
for Czech and Slovak clients, a subsidiary of one of the largest
and most renowned American companies will be located in Ostrava
(Moravia-Silesia region) and will provide work for up to 500
qualified staff members. The total investment exceeds three
million euro.
"Our primary reason for opening the new centre is the growth of
GE Money in the Czech Republic," says Jiri Pathy, Chairman of
the Board and General Director of GE Money Multiservis, the
company in charge of developing the new centre within GE Money
group. "In order to maintain a high standard of services, we
will gradually increase the number of staff who are responsible
for operating GE Money group and caring for its customers. The
new customer service centre allows us to continue to fully meet
our customers' needs," adds Jiri Pathy.
Taiwan-based ASUSTeK COMPUTER INC. is in the process of
constructing a new plant and repair center in Ostrava.
Investment into the facilities will reach 20 million EUR and
eventually at least 1300 employees will work be employed. The
centre should produce up to 200 thousand personal computers per
month and the capacity of the repair centre should reach 50
thousand computers per month.
"The important factors in deciding on the location of this
plant were mainly the preparedness of the industrial park in
Ostrava-Hrabová and the proximity to the Technical University of
Ostrava with which we intend to closely cooperate. We are
interested in their graduates and would like to take part in
creating specific study programs for their electrical
engineering departments. We are already considering moving part
of our technology-driven activities to the Czech Republic," said
George Wu, Associate Vice President of ASUSTeK COMPUTER INC.
The best quality and most beneficial industrial zones in the
Czech Republic were handed awards by the Czech ministers. The
fifth annual "Industrial Zone of the Year" awards were
presented according to the recommendations of the Ministry of
Industry & Trade and CzechInvest in cooperation with the
Association for Foreign Investment (AFI) and partners in the
"Partnership to Support Foreign Direct Investment in the Czech
Republic".
The award for Industrial Zone with the Most Economic Benefits
was given to the "Cernovicka terasa" Industrial Zone in Brno,
while the Zone with the Most Social Benefit in 2004 was the
Ostrava Hrabova Industrial Zone - 1st Stage. The Industrial Zone
with the Best Town Planning Solution is being prepared by a
private developer in Ostrava -- CTPark Ostrava, and the
"Brownfield of the Year" was won by the Skoda Plzen Industrial
Zone.
American company CTS Corporation declared plans to
invest nearly 22 million dollars into a new facility in the
Ostrava region of the Czech Republic. CTS Corporation is a
leading designer and producer of electronic components for the
automotive and electronics industry. Their main customers are
Siemens, Magneti Marelli, Pierburg, Toyota, Renault and Nissan.
The new facility is expected to employ over 160 people within
three years. Production in the new plant is targeted for as
early as June 2006.
"This investment in the Czech Republic will enable us to raise
our production capacity and better serve the European market,
which at present is supplied mainly from our plant in Great
Britain," commented Ron Bell, Director of CTS's European
Automotive Operations, and added: "In the Ostrava facility we
will be producing electro - mechanical sub - systems and sensors
for the auto industry."
Ostrava Property Figures
Apartment and Flat Rentals in CZK per month (2005 1st Q):
(average range - exceptions can be found either way)
Size / CZK per month
1 + 1 (studio or bachelor) / 4 000 - 5 500
2 + 1 (1 bedroom) / 5 000 - 7 000 3 + 1 (2 bedroom) / 7 000 - 9
000 4 + 1 (3 bedroom) / 8 000 - 11 000 House Sales in thousands
of CZK per flat (2005 1st Q): (average range - exceptions can be
found either way)
Size / New Build (ave. 17 000 CZK/m2) / Heritage Building
1 + 1 (studio or bachelor) / 650 - 950 / 350 - 700 2 + 1 (1
bedroom) / 800 - 1 200 / 500 - 800 3 + 1 (2 bedroom) / 1 300 - 2
500 / 700 - 1 200 4 + 1 (3 bedroom) / 1 800 - 3 000 / 1 200 - 2
100
Property Examples (common closing prices are commonly 5
- 10% less than the asking price)
Property Description / Link
Studio (1 + 1) flat right in the center of Ostrava. 37 m2.
Completely reconstructed. Floor 5 of 5 with an elevator. Asking
price: 395 000 CZK / Ostrava Property Example 1
2 bedroom (3 + 1) completely reconstructed. Floor 1/3. 76 m2.
The price includes a garage. Asking price: 1 260 000 CZK / Ostrava Property Example 2
More examples added regularly...
As we've emphasized before, at Czech Point 101
we are not going to over-inflate figures or try to sell you on
hyped up facts. Our goal is to inform you to make the best
investment decisions possible.
Recommended Reference Websites
Ostrava
city website Ostrava Airport Ostrava Hrabová
Industrial Zone
The sources for this newsletter include the Ostrava city and
CzechInvest.
About the author:
Nathan Brown is the owner of Czech Point
101, a business which helps buyers find their perfect
home in the Czech Republic and complete the purchase. Current
projects in which Mr. Brown is directly involved include
commercial and residential property investments and a portfolio
of individual and corporate business interests in Czech Republic
and North America.
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