Development Projects – How to buy them?

Investing in a development property (new build) in the Czech Republic can be an attractive opportunity, whether you’re looking for a home or a long-term investment. However, buying a property that is still under construction comes with its own set of advantages, challenges, and financial strategies that you should carefully consider.

In this blog I would like to inform you about the overall picture of how I look at development projects, what are the specifics in contrast to buying an already built apartment and how to approach the whole thing.

Advantages of Buying a Development Property

• Lower Initial Price – Buying early in the project often means securing a lower price compared to the market value upon completion. Now of course you need to consider that you cannot compare prices of older (10+ years) to a new development projects. 

• Customization Options – Developers generally allow buyers to choose interior finishes, layouts, and materials, which can be very nice as you can customize your home however you need. Keep in mind this is only possible in the early days of construction and cannot be done if the constructions is already largely finished.

• New Technologies & Energy Efficiency – Newly built properties meet modern energy efficiency standards, leading to lower utility costs. All new apartments NEED to have a PENB (energy efficiency rating) of A or B, which in contrast to fluctuating energy prices is an advantage.

• Value Appreciation – The property’s value often increases between the time of signing the contract and the project’s completion, allowing for potential capital gains and generally newer properties tend to evaluate a little better than an old apartments in old buildings, but I guess that makes sense.

Disadvantages and Risks

• Long Waiting Period – Depending on the stage of construction, you may have to wait months or even years before you can move in or rent it out. So if you need to move in immediately, development project is not a good option for you.

• Developer Risks – If a developer faces financial difficulties, the project could be delayed or, in extreme cases, halted leading to some potential financial risk. Always check who is the developer, if there were already some finished projects, check Google and search for the developer if you do not think some news that might be concerning etc.

• Cash Flow Challenges – Payment structures during construction can be financially demanding, especially if you are also paying rent elsewhere. More later in this Blog!

• Market Fluctuations – While property values tend to rise, there’s always a risk of a market downturn before completion.

How Are Development Projects Paid For?

Most developers in the Czech Republic follow one of these payment structures:

1. Standard Deposit Model – You pay an initial deposit (typically 10–20% of the property price) when signing the contract, with the remaining balance paid upon completion. This is not very typical nowadays especially for Prague and Brno market, as developers tend to request payments as the construction go – progressive payments model.

2. Progressive Payments Model – Payments are made in stages during construction (e.g., 20% at signing, 30% when the foundation is completed, etc.). This requires ongoing mortgage drawdowns, which means you start repaying the mortgage even before moving in. If you’re renting another property at the same time, this can strain your cash flow.

   I want to give you real exact numbers so you know exactly what to count with

3. EXAMPLE OF PROGRESSIVE PAYMENT MODEL – let’s say you are buying a development project for 8 milion Crowns and you are taking 80% mortgage (rate 4.79%). You signed the contract in January 2025 and the apartment will finish in January 2026. During this time developer wants part of the payments as follows: January 2025 20% (own resources), April 2025 35%, July 2025 35%, at the end of construction January 2025 remaining 10%. How would this look like in terms of mortgage payments? See here: