Pressure on price can negatively affect the quality and standards of housing. This is not the path we want to take, says the head of M.E estates.
Energy efficiency, sustainability, technical solutions, and price. These are, in addition to location, the main factors that interest today’s homebuyers. For developers, this often means finding the balance between high standards and an affordable price. “We always consider which technologies are worth it. Sustainable solutions cost money, which naturally translates into the apartment price,” says Oldřich Mach, founder of the development company M.E estates.
What was your path to starting your own development company?
I come from a family of developers. My great-grandfather founded a construction company during the First Republic, which later also became a development firm. This meant he built entire streets and then sold the houses. The company I founded therefore continues this family tradition. My grandfather worked as an independent designer even during the communist era. He stayed in the field even at a time when the regime was not supportive of such activities. That inspired me, so after high school I enrolled in the Faculty of Civil Engineering and chose the field of architecture and construction. After graduation, I focused on project management and eventually moved into development. I was always drawn to doing my own projects, which I finally fulfilled in 2017.
What do you focus on in your developments?
Primarily on residential construction, but always with some added value. We prepare projects that are interesting in some way and relatively unusual in the Czech Republic.
What can that added value be?
It could be a connection with a body of water, for example living on the water or near it. That interests me a lot right now, and we are working on it. One of the upcoming projects is being developed in cooperation with a well-known Czech architect, and I dare say it will be quite unique. Unfortunately, I can’t reveal more for now.
What do investors and homebuyers focus on today? Do they want fully furnished apartments, or do they have other requirements?
As for investors, they mainly demand the most affordable price possible to make the investment worthwhile. The situation in the real estate market has pushed many developers to start building mainly for funds that order entire buildings for rentals. But that creates enormous price pressure, which can negatively affect quality and standards. Such an apartment may be suitable for rent, but in my opinion, it is not suitable for someone to buy as their own home and make the biggest investment of their life. This is not the path we want to take, even though I understand that large developers need to sell even in difficult times. On the contrary, we try to draw more attention to this issue. Many people can tell the difference between a luxury car and a regular one, but few recognize the difference in housing quality.
Do you also build rental housing, or do you sell all your apartments?
Most of our projects are intended for sale, but we also have a few projects where we rent out the apartments ourselves. I have good experience there that when an apartment is well-equipped, well-made, and technically sound, there is strong demand for it. I believe that even if it is an apartment for rental housing, it should still be of high quality. People then enjoy living there, and tenants don’t change so often.
When we focus on apartments intended for owner-occupancy, how much have the requirements changed over time? Do developers today have to emphasize different things than, say, twenty years ago?
Energy has become a big topic. People today are interested in housing standards in terms of energy savings because they want to know what their costs will be. In the past, people asked about the Energy Performance Certificate (EPC) only because it was required by law; today, they really care about it. We have also noticed a significant shift in the emphasis on the technical design of apartments. On the other hand, I think people today don’t care as much about architecture; standards such as bathroom design are no longer as important to them. This is also because standards are now so high that even the cheapest projects are sufficiently attractive from this perspective. Especially with family houses, which we currently have as one of our projects, people are very particular about the selection and precise specification of the house. They go into detail about everything, including all the information in the EPC.
Is sustainability an important factor today as well?
Yes, which is why we devote a lot of attention to it in our projects. One of our latest undertakings is the emerging project Klamovka Park, which we are developing in cooperation with the investment group Aristo and the construction company Kafer. I dare say that at this moment it is one of the best projects in terms of ecological sustainability. In its energy performance certificate, it has category A, and the building meets the criteria of a passive house. This means an annual consumption of up to fifteen kilowatt-hours per square meter of heated area. We meet the criteria even though we use gas heating. I think that in Prague specifically, this is still the best heating option, so we have two condensing gas boilers combined with underfloor heating. For the owners, it is also more cost-effective than, say, a heat pump.
Will gas be sustainable in the future?
No, and we can already see that now, because it is much harder to meet category A criteria with it. On the other hand, we believe that at this moment it is the most suitable solution for the building. However, we have space reserved for heat pumps and the preparation in the boiler room, so when it becomes necessary, we can quickly replace the gas boilers. For example, domestic hot water is already being provided by a heat pump combined with solar panels on the roof.
So you have heat pumps and photovoltaics. What other technologies are you using there?
We are planning on using heat recovery ventilation, i.e. controlled air exchange. We have an intelligent system that monitors humidity and carbon dioxide levels. Based on that, it automatically exchanges air in the interior. This makes a big difference in apartments, as people usually don’t ventilate that much. I even read a study where they examined carbon dioxide pollution on the way home from work. The highest concentration was actually at home. In the Klamovka Park project, heat recovery is also used because on one side there is the busy Plzeňská street. The clean air, which we further filter, is taken in from the park side, so everyone has fresh air at home. The solar panels on the roof, together with the heat pump, heat domestic hot water for all apartments and provide electricity for common areas. This also includes pumping rainwater for irrigating roof terraces or charging electric cars and bikes. Any surpluses are then used in the apartments.
At what stage is the project now?
At the beginning of this year we should have the building permit, and in March we want to start construction. We are now launching sales.
How do you approach sustainability in your other projects? Is it a topic everywhere?
We always consider which technologies make sense. Sustainable solutions cost money, which naturally translates into the price of the apartment. From another project I have the experience that if you want to make everything perfect in every respect, you can easily end up in a situation where the apartments don’t sell because they are too expensive. That’s why we always weigh all the options and also work with the specifics of the location. For example, in a project outside Prague, where the air quality is sufficient, we dropped heat recovery and focused instead on the technical design of a mechanical ventilation and air exchange system. In the Klamovka Park project, building with higher standards and an emphasis on sustainability was a natural choice, because we can connect it directly to the park. The building will be connected to the park by a footbridge, making it a direct part of it and separating it from Plzeňská street. There is a kindergarten and a school in the park, so we focused on ensuring that parents can let their children go there safely on their own. They run outside and it’s almost like being in the countryside. We like to say the project has two faces. It’s great for people who love the city and culture, because they can be in the city center by tram in just a few minutes, but also for those who like to relax and want to live in a quiet location.
So you tried to make the building blend in with the surroundings?
Exactly. And not only in terms of sustainability and making use of the location, but also when it comes to architecture. We preserve the First Republic style of development, such as bay windows, but with modern elements. For example, we have designed playful glass balconies facing the street. The same applies to the interior. We use terrazzo, another First Republic element, but in a modern design. We have vinyl floors, because they work best with underfloor heating, but they are laid out like parquet, so at first glance you can’t tell them from wooden parquet floors. The building is architecturally interesting, but at the same time we designed it not to be unnecessarily provocative. We are well aware that project financing is demanding, and any extravagance only prolongs the approval process.
It’s no secret that the real estate market is somewhat frozen at the moment. What further development do you expect? Do you think the situation will improve?
Yes, I definitely think so. That’s why we are bringing the project to market right now. I believe interest rates will drop further and the market will revive. We are mainly at a stage where interest rates will certainly not rise anymore — at most, they will go down. From my own experience, I know that a reduction in VAT also helps. People perceive it as if the apartment suddenly became three percent cheaper. I think that if someone is ready to buy, now is the right time. Once everyone starts buying, prices will soar again. It is said that apartment prices in Prague will rise at a fairly fast pace. It will definitely be quick. The supply is really low at the moment. Construction has stopped, large developers were building more for funds and didn’t put many apartments on the market. If interest rates drop further, the process will be fast, because demand will exceed supply.
Oldřich Mach
He graduated from the Faculty of Civil Engineering at CTU with a focus on architecture and urbanism. He then gained experience in project management and investment construction. He participated in a number of major projects in the Czech Republic and abroad. In 2017, he founded his own development company, M.E estates, which continues a family tradition dating back to the First Republic.
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