Condohotel investment in the heart of Prague: Honest Karlín as a new opportunity for passive income

Prague has joined the European destinations offering condohotel investments with the HONEST Karlín project. This investment model is already well-established in Poland, France, Spain, and Italy. However, the Prague market has specific conditions that deserve careful analysis.

The Specific Offer of HONEST Karlín

Currently, several units are on sale within the HONEST Karlín project:

• Apartment 101: 1+1, 31.2 m², priced at 5,682,150 CZK (229,000 EUR)

• Apartment 102: 1+1, 26.9 m², priced at 5,682,150 CZK (229,000 EUR)

• Apartment 103: 2+kk, 49.6 m², priced at 9,211,500 CZK (371,000 EUR)

  
  

The guaranteed rent is secured for 3-5 years, offering a 4% annual return on the purchase price. Notably, this does not include the stated inflation indexation. This means that, based on the listed prices, monthly returns can range from CZK 18,940 to CZK 30,710, depending on each apartment's size.

Analyzing European Condohotels

Guaranteed Returns Across Europe

Poland leads in condohotel yields, boasting an average gross yield of 6.13% in 2025, an increase from 6.03% in 2024. Yields in Warsaw can even reach as high as 8%. This makes it one of the most attractive markets in Europe.

France, through operator Adagio, guarantees returns of 4% annually after covering maintenance and management costs. Italy offers similar returns of 4-5% in new projects, while Spain adopts a different model. For instance, Hotel101 operates on a revenue-sharing basis of 30/70 between the unit owner and the operator.

HONEST Karlín offers a guaranteed return of 4%, reflecting Western European standards instead of Eastern European opportunities. More about comparison across Europe.

An Overview of the Prague Market

Price Comparison with Short-Term Rentals

The average Prague apartment is occupied an impressive 288 nights per year. This translates into a median occupancy rate of 79% and an average daily rate of $93 (about 2,300 CZK). In 2023, the typical Airbnb host earned an average annual income of $24,000 (600,000 CZK).

When comparing this to the specific prices of HONEST Karlín, we find:

• Apartment 102 (26.9 m²): Priced at 5.68 million CZK with a guaranteed 4% yield equals 227,200 CZK annually.

• Self-managed Airbnb of the same apartment could yield 400-600 thousand CZK per year, but carries higher risks.

  
  

Ambiguities in Guaranteed Rent Conditions

While the project presents an enticing opportunity, several key details remain unclear:

• Maintenance and Repairs: It’s not specified who bears these costs; are they included in the guaranteed return or paid by the owner?

• Exit Possibility: The option to exit the guaranteed rent regime is mentioned, but the terms are vague.

• Inflation Indexation: This likely isn’t included within the 3-5 year contract.

• Management Fees: These are also unspecified.

  
  

Expected Regulatory Changes and Their Impact

Starting in July 2025, an electronic system will be launched for registering and licensing short-term rentals. This regulation is expected to increase compliance costs and likely reduce the number of Airbnb listings, particularly in the city center.

Prague has already seen a decline in Airbnb listings, especially in historical areas that previously boasted high concentrations of short-term rentals. Ironically, this could lead to a rise in the value of professionally managed condo hotels as demand increases.

Revenue Dynamics in Context

Comparison with Traditional Rentals

Rental prices in the Czech Republic have surged by an average of 17% year-on-year, reaching CZK 344 per square meter in 2025. In Prague, average rents stand at CZK 412 per square meter, reflecting a growth of 16%.

When focusing on specifics related to HONEST Karlín:

• Apartment 102 (26.9 m²): Market rent is about 11,100 CZK/month, totaling 133,200 CZK annually compared to a guaranteed 227,200 CZK.

• Apartment 103 (49.6 m²): With market rent around 20,400 CZK/month, that's 244,800 CZK annually versus a guaranteed 368,460 CZK.

  
  

Guaranteed yields from the condohotel exceed standard rents by 50-70%. This denotes the disparity between long-term leases and the lucrative short-term rental market, highlighting that Karlín is a desirable location. The pricing per square meter for this project reflects its prime location, which is significantly above the average in Prague.

Capital Appreciation Outlook

Luxury real estate in Prague is expected to appreciate between 3% and 7% in 2025. This aligns with the general forecast predicting property price growth of 5-10% that same year.

Why Choose Karlín as a Location?

Prague ranks first among cities experiencing the highest year-on-year increase in investor interest, with a growth rate of 14%. This confirms the growing appeal of the capital city. Karlín itself benefits from a rising influx of international tourists, with 78% coming from abroad.

The average daily rate for Airbnb accommodations in Prague has surged by 25% over the last two years.

Thorough Risk Analysis

Advantages of the Guaranteed Model

• Predictable Revenue: Investors benefit from consistent income irrespective of occupancy rates.

• Less Administrative Burden: Investors are not responsible for marketing and administration.

• Partial Protection Against Regulatory Changes: The investment offers some degree of security.

  
  

Disadvantages and Potential Risks

• Lower Return Potential: Significantly lower returns compared to self-managed options.

• Opaque Maintenance Conditions: Unclear financial responsibilities concerning maintenance and repairs.

• Absence of Indexation: Without inflation indexation, real returns diminish over time.

• Limited Flexibility: The conditions for exiting the guaranteed regime remain vague.

• Operator Dependence: There is a risk associated with possible changes in operational conditions or bankruptcy.

  
  

Conclusion: A Conservative Approach

HONEST Karlín embodies a conservative pathway in condohotel investments, beginning at an entry price of CZK 5.68 million for the smallest unit. While the guaranteed 4% yield without inflation indexation may represent a lower yield, it does offer investors a level of stability worth considering.