Exclusive interview for ESTATE real estate magazine
An interview for ESTATE real estate magazine, by Jan Němec, photo Ondřej Pýcha
Emil Kasarda and Jiří Kučera: Reputation and good name are the essential
Luxent the real estate agency, which focuses mainly on the luxury real estate market, celebrated ten years of successful operation this year. It was established and gradually built by the owner Emil Kasarda; expanded into the areas of commercial real estate and consulting for developers.
How did you get into the real estate business?
EK: I have been involved in the real estate since I was twenty-two when I started in a small real estate agency. Then I worked for a developer for a year, where I experienced with development projects. After a lapse of time, I stopped enjoying being dependent on others and I wanted to realize my own dream, build and develop thing of my own. So at the age of twenty-four, I decided to start Luxent. That was in 2008, the economic crisis had just begun.
You have chosen it in the worst possible time.
EK: I was lucky, although of course, it favors the prepared one. Already after the first year, we became the exclusive seller of a house project worth about 160 million CZK. The developer was very satisfied with the speed of sales and the achieved prices, which helped us a lot in the crisis. On the basis of this project, we were able to develop the company further and also to profile ourselves in the luxury real estate segment.
So focusing on the higher segment of the luxury real estate, was that the plan from the very beginning?
EK: I went through everything from the cheapest flats in panel houses in different parts of Prague to more luxurious older and newly emerging real estate, especially because of the work with the mentioned developer. After these experiences, I decided to bet on quality rather than quantity.
In other words, sell not dozens of cheaper apartments, but rather less expensive ones.
EK: Yes. We have profiled ourselves in the area of premium real estate, which is what the name of the company refers to. By the way, it crossed my mind by accident when I had a problem with the register of the originally intended name. I came up with 'Luxent' in literally five seconds.
When did Jiří Kučera come to the company to "direct"?
JK: Emil and I have known each other and have been cooperating for a long time, but I came directly to Luxent two years ago.
As the owner and director, how did you divide your competencies?
JK: At first I wanted to deal mainly with the progress of development projects. But gradually we agreed to take over the operational management of the company and Emil will focus more on business development.
EK: And that's what I really enjoy, I prefer to be in the field.
JK: That's how we complement each other. I bring experience from state administration and diplomacy, from a large "corporate" and also from the management of a medium-sized company.
However, the sale of luxury real estate is a different league than the prefabricated houses, clients are more demanding and they are looking for traditions. It was probably not easy to establish oneself as a newcomer. What was the competition like?
EK: At that time, there were not so many real estate agencies dealing with luxury real estate. But because I built the company from scratch and people did not know the brand, the development took some time. I started without capital, without marketing, with one assistant… Only after a few years we became known better. Today, of course, I have more experience and I know that I would do some things differently from the beginning, faster, more efficiently. But that is development.
How did you get clients as an unknown real estate agency?
EK: My first clients were my acquaintances, friends. Today it is different, people turn to us themselves and entrust us with their properties for sale almost exclusively on the basis of recommendations. But in the beginning, we actually took over most of the real estate through personal contacts.
JK: People who buy luxury real estate require longevity, stability. Someone who is at the appropriate level. The company in this segment must have its own history. In the beginning, it is much harder. Clients who are interested in premium real estate want to work with a serious partner on their investment.
Can you describe the first project you talked about?
EK: It was a new building of 24 housing units in Prague on Anděl. We have managed to sufficiently emphasize the quality of the project and the profitability of the investment to those interested, and despite the crisis, we sold the apartments for incredible 80 to 110 thousand CZK per square meter. We can explain well to our clients the strategy of buying real estate in the investment portfolio, even in times of economic instability.
What did the company continue to grow?
EK: In addition to family houses and luxury flats, we also paid a lot of attention to apartment buildings. We searched for them, reconstructed them, and sold them to investors. Then we put the earned money back into the further development of the company, which grew exclusively organically, no foreign capital helped us.
Here's the question – successful companies attract buyers. Have you ever received an offer to sell Luxent?
EK: Such an offer was already there, but I refused.
EK: I enjoy developing the potential of the company. We grow every year, we are constantly increasing the number of sold and rented properties and we work with partners in other areas - architects, designers, designers…
JK: It's clear that there is a lot of done work behind where the company is today. It would be a pity and it would not make sense to pass Luxent on just like that, perhaps under a franchise. This would lose the intimate character of the company, as well as the uniqueness of the approach to clients and the trade-in quality real estate.
EK: Franchises have approached us several times…
JK: Our work is based on personal relationships. Each of our co-workers takes care of their own contacts themselves, and even the client who contacts us communicates with a single real estate consultant from the beginning. And this approach cannot simply be transferred to another brand.
In the field of luxury real estate, a broker is certainly important. How do you find them? The Czech Republic is famous for perhaps a record number of real estate agents, but their quality is often not great.
JK: We are not looking at any price or not placing an ad 'Looking for a broker'. Usually, we meet someone interesting at work, and maybe in two or three, we put it together… It must be someone who thinks like us, has something in life and professionally behind him. But we also have a colleague who joined us right after college, writing a thesis on real estate. Others are professionals with many years of experience. In addition, our real estate consultants are not only experts in the field of real estate, but are also naturally interested in architecture, history, art, culture…
So they can talk to the client about music, for example?
JK: Yes. We meet clients who have diverse interests.
EK: Of course, the have to have a business drive but shouldn't be a tight-lipped person who can't talk about regular things.
JK: Ethical standards are especially important. Ethics is fundamental. The reputation of our field today is not good. Large stores also attract people of dubious characters. We are aware of this and we are glad that we ourselves contribute to raising the reputation of real estate work. Above all, our clients appreciate us for that, which of course makes us happy. Reputation and good name are very important.
EK: You can build a company for a long time but you can lose your reputation very quickly. The most important thing is to have the trust of clients, property owners, investors, and all co-workers.
When you describe a luxury real estate business, what are you different from other offices?
JK: I would say, according to the feedback, that credibility, and a truly individual approach. Clients are usually recommended to us by someone, so we already know a little about them in advance. Based on this, we are able to understand them and choose as a partner such a colleague, with whom he will sit down humanly so that they can understand each other. It is a colleague who will then take care of him, accompanying him through the entire process of sale or purchase, also so that the client does not have to repeat everything to different people.
EK: We place great emphasis on the perfect presentation of real estate. We use modern technologies and procedures when taking photos and recording videos.
JK: We like our job, our clients, and our real estate. We think comprehensively, we are creative in our approach. We professionally support the client, perceive his needs as if they were our own, and thanks to that we are able to bring appropriate solutions.
What is your clientele, if it can be generalized?
JK: It's mainly people who have already achieved something if I simplify it a lot. The wild 90s are gone, today there is a lot of capital that our entrepreneurs have created in those almost thirty years, they pass it on in the family. They have succeeded in their business and, because of how demanding they are on themselves and their subordinates are also passed on to their business partners - so they place high demands on us as well. As far as nationality is concerned, it is no longer true that most luxury properties are bought by foreigners.
EK: Ninety percent of clients are Czechs, at least in our country.
JK: They are educated people and they know what they want. And they are also, of course, very busy.
Do you focus only on Prague, or also on other regions?
EK: The largest projects are in Prague and Central Bohemia. But otherwise, we also offer individual properties throughout the country, castles, homesteads, projects, investment properties…
JK: We are now working on the Molo Lipno project. It is a unique project that is approaching the phase of a sharp sale. It is located in the most lucrative place in the center of Lipno nad Vltavou and has no competition in the area. We offer apartments in the spirit of the 'second home' concept at the level of a five-star hotel.
How does the astronomical rise in real estate prices in recent years reflect on your business?
JK: In general, the price level in the real estate market is rising, that's true, but at different rates in different segments. The prices of flats in Prague are growing the most, this is mainly related to insufficient new construction. If three years ago the price of luxury housing was considered to be 100 to 110,000 CZK per square meter, today it is already the standard in offer prices for new real estate. Their real selling price is around 95,000 CZK. Even the middle class can no longer afford that. We operate in the middle and upper segments, and prices there are also rising. Today, the limit of the perception of luxury has shifted to 150,000 CZK per square meter. But if the price of quality real estate is rising, that's fine. Prices have not yet reached the current European level, although they are often very close. Quality things are always naturally more expensive and there is also purchasing power for them, in the luxury segment price growth is not such a problem.
Is it still worth investing in real estate at today's prices?
JK: Yes, but it can't be taken as a lump sum, you always have to consider a specific investment. For example, when renting residential housing in the standard way, the usual yield is about three percent, but we can also provide higher. Other factors also speak for real estate as an investment, such as the fact that it is something tangible, something that has a history. You do not touch book-entry shares, they do not have such emotional value for you. Real estate is also a very liquid investment - when a client needs money, he will sell it at a fair price definitely faster than, for example, investment diamonds or gold. And it can count on rental income and at the same time growth in property value over time. In the long run, the price will not be much higher - it copies inflation and is needed by a 1-1,5% above it. But it's still growing, conservative investors know that.
EK: In the last three years, however, real estate prices have skyrocketed by thirty percent, some by as much as fifty percent. This is extreme. For the most part, this is really stable growth, not a risky investment.
How many people buy real estate from you as an investment? How popular are luxury properties as a rental investment? Classic lessons say that it is best to rent the cheapest apartment 2+1 somewhere near the metro station.
EK: That ratio is about 40 to 60 %. This is also due to the fact that we also offer development projects where the apartments are suitable for rent.
How is the popularity of investment in real estate developing?
EK: It is clearly growing in flats. And I think it will increase even more due to the tightening of mortgages, because many people will not reach for their own housing and will have to live in rent, or demand will increase. And someone has to provide the rent - for people who have the necessary capital, this is a huge opportunity. I think that we will gradually get closer to Germany, for example, where rental housing is far more widespread than in our country.
JK: This is also reflected in the offer of development projects. Developers no longer expect to address individual end clients, but know that they must adapt the offer to investors as well. There are projects where, for example, half of the apartments are sold individually and the other is ready for investors.
We got to development projects. You also work with developers. How is cooperation and how did you get to it?
EK: In the past, I gained know-how about how projects are calculated, how they are offered, how this business works. We provide complete advice for developers.
JK: I was responsible for the business of a prestigious Prague developer, so I know the internal environment of this business well. I can look at the opportunity from a developer's point of view. We have put our experience together and today we are able to prepare an offer for developers tailored to what they need. It depends on what stage we get to the project. When it is at the very beginning, when the developer is considering what he really wants to do with his property - or even better, when he is considering his acquisition - we are able to bring him a market view at that moment.
In other words, advise what is best to build on the land.
JK: Exactly. We can make basic calculations. When a developer introduces his philosophy to us, we can also look at it from the client's point of view. We are able to help the developer build a project that will maximize revenue in a given location. We offer complete marketing services, legal support, help from designers… The developer can focus on engineering and construction as such, and if he does not use all our services, he will choose only some from the offer. And for someone, we provide purely our core business – sales. In any case, we are sure that we can sell the apartments under conditions that the developer would not be able to achieve on his own.
In other words, you sell it more expensive.
JK: Yes. We earn money for the service we provide and which is paid for by the developer. But it also depends on the strategy. Some people want to maximize profits and don't care so much about how long the project will be sold, while others need to sell as quickly as possible. Sometimes he doesn't want to build and keep his own business team. When we know this, we offer alternatives, we suggest prices, full service.
EK: There are a lots of developers who have a project ready and just want a sale from us. But now we have the experience where we helped formulate projects from the very beginning. We coordinated and commented on the project, helped tune the composition of the apartments and their layout, surfaces, and design standards, prepared a turnkey sales strategy - and the yield was about thirty percent higher than expected by the developer.
JK: He also won the Architects' Award.
You are also involved in property management. What does it all entail?
JK: We will make sure that the investment works, that the property is occupied, we will look for the required tenant. We will also take care of the property from a technical point of view. We simply provide a complete service so that the investor does not have to worry about anything himself.
EK: We can also mediate reconstructions, for example.
Recently, you have expanded your portfolio of services to include commercial real estate. Why?
EK: We have been dealing with commercial real estate for a long time. It happened that the client and I dealt with his private real estate, and we found out from him that he was considering relocating his company. We gradually gained experience and contacts in this area as well.
JK: Building a separate Luxent Commercial department was logically the next step in fulfilling Luxent's vision for development. Today we can find and equip offices, arrange relocation of companies, provide architects, and we also provide a complete service in commercial real estate.
There can be seen a strong story behind Luxent.
EK: And also in front of Luxent!