Investors are building dozens of flats in Světlá nad Sázavou. Regions may have more potential than Prague, they say

Fourteen kilometres northwest of Havlíčkův Brod is Světlá nad Sázavou. It has around 6,300 inhabitants and is known in the rest of the country for its glass and stone production. The entire Vysočina region is well known to Jan Lobo, co-founder of the K&L Rock investment group, who now operates mainly from Prague, but returns frequently to his birthplace in Havlíčkův Brod and its surroundings. Now, also because in Světlá nad Sázavou, his group has recently obtained a building permit for the construction of dozens of new flats and has started building. Regional development is to form one of the important parts of K&L Rock, which Jan Lobo founded with Erik Kmet at the end of 2019.

The group's name hides the first letters of the names of its founders, who share a common sporting past. Both played hockey. Erik Kmet was a goalkeeper for HC Prešov and HK Poprad until he was 25. Jan Lobo also played hockey from childhood until he was twenty. However, they did not meet on the ice until they were in the business world, as both were involved in investments and business in different areas. Eventually, they decided to take their destiny into their own hands and started the K&L Rock Group, where all the areas in which they had been involved for several years are connected.

In 2020, Kmet and Lobo launched an alternative investment fund that appreciates clients' funds by combining real estate investments and trading in the stock or commodity markets. The division called Global Markets is run by Erik Kmet, who started trading on stock exchanges during his hockey career and now combines long-term investments in stocks (50 percent of the portfolio) with active day trading (30 percent) and also automated trading (20 percent) at K&L Rock.

The entire group currently has around half a billion crowns in assets, according to its statement, and its second investment pillar is real estate and property development. While investing in the capital markets has been running for some time and K&L Rock is targeting an appreciation of over 10 per cent per annum, the real estate division is just now getting off to a good start. The young group recently obtained a building permit for a residential project in Světlá nad Sázavou, where it plans to build 43 residential units in the first phase.

The total value of Rezidence na Bradle, as the premiere development project of the young entrepreneurs (Erik Kmet'a is thirty-one and Jan Lob is twenty-seven) is called, is expected to reach CZK 125 million. Currently, the first phase consists of 43 flats, while K&L Rock already has land available for the construction of another 120 flats. The total volume of investment should thus exceed half a billion crowns over the next eight years.

If everything goes according to plan, the first owners should move in in the second quarter of next year. Kmet'a and Lobo originally wanted to use the capital raised from a bond issue to finance the construction, which has raised tens of millions of crowns so far, but the group is currently negotiating with a large Czech bank to co-finance its first development project. The bank requires the highest possible share of equity.

"To a large extent, we will finance the start of construction from our own money that we have earned in recent years, and we expect that the bank with which we are negotiating will join us in the course of the project, as is standard on the market. In the meantime, we will use the bonds, for example, for land purchase or project work," says Jan Lobo. In its first year of operation, K&L Rock made a net profit of almost CZK 2 million, in 2021 its profit exceeded CZK 16 million and last year should be even a bit better, according to Jan Lobo. The final numbers are now being finalised by the group.

The matter of reputation

When Lobo and Kmete started planning everything, the market situation was not yet affected by the pandemic, the war in Ukraine or the economic crisis, but they do not want to change their plans. However, the cooling is also affecting the real estate market, and Lobo admits that if they had sold the flats in Světlá a few years ago, they might have sold half of them by now. "We are currently at 15 percent, but we are on schedule," he says.

While some developers have put their projects on hold due to the worsening market situation, K&L Rock continues to build. "In today's situation, we would have every right to say that we are putting construction on hold, but we have promised something to our investors and we realise that our reputation is on the line for the first development project given that we are a new player. We want to be in business for the long term, so Erik and I said it's okay if our profit is down a few percent on one project. The priority for us now is to finish Světlá," Jan Lobo describes the strategy.

When K&L Rock decided to start the development, it was their historical relationships in the Highlands that led them to the opportunities in Světlá nad Sázavou. Initially, it looked like a smaller apartment building with fifteen flats, but in the end it was possible to build up to 65 flats. In the final version, the residence at Bradla has a total of 43 units and the architectural study was drawn by the Perspektiv studio, which is behind the offices of many well-known companies such as STRV, Trask and GoPay, and has also delved into residential housing and also designed the square near Masaryk Station, where a new building by Zaha Hadid is being built.

Together with K&L Rock, Perspektiv wants to bring a higher standard of overall design and furnishings to the Vysočina region, where investors see potential. "We have found that regions such as Vysočina can offer much greater potential than Prague in some respects. It is divided by the biggest developers, who are not interested in the smallest towns. There is a shortage of flats in them, and the implementation of development projects in them is much faster. In Světlá, we received a building permit two and a half years after buying the land, which is completely unrealistic in Prague," says Lobo.

According to Lobo, new flats in Světlá nad Sázavou could not only mean better opportunities for young families, who otherwise often move to bigger cities for work and amenities, but it could also be an interesting opportunity for investors. And not only the local ones, which K&L Rock has experienced so far, but also those from Prague. "Nowadays, buying an apartment for investment often doesn't make sense in Prague because of the inflated prices, but it can still make economic sense in the Highlands," adds Jan Lobo.

Article source: https://cc.cz/investori-ve-svetle-nad-sazavou-stavi-desitky-bytu-regiony-mohou-mit-vetsi-potencial-nez-praha-rikaji/