You Can Buy a Czech Castle for $13,000

The Libejovice chateau looks like something out of a 19th century romantic novel: an elegant, mustard-hued Renaissance palace with tall windows and elaborate balcony railings bearing the noble Schwarzenberg family's coat of arms. Natalia Makovik will sell it to you for less than the price of some Manhattan studio apartments. The catch: Restoring the place, a two-hour drive south of Prague, could cost 10 times the purchase price. “I look at a ruin, and I see an investment opportunity," says Makovik, founder ofVIP Castle, a real estate brokerage specializing in historic buildings.

There are plenty of such opportunities in the Czech Republic, with its 2,000-plus castles and chateaux, the legacy of a turbulent history of feudal lords, royal dynasties, and minor aristocrats. Makovik started her business in 2007, eight years after she arrived penniless from her native Belarus. The history buff had fallen hard for the run-down castles she discovered in the Czech countryside. Lacking the money to buy one, she decided to make them the focus of her career—first as a tour guide and then as a real estate agent.

Although it took Makovik more than five years to close her first deal, she says she now sells up to three historic properties a month, priced from €12,000 ($13,000) to €4 million. She typically takes a 3 percent commission, which last year earned her about 4 million Czech korunas ($161,000). The 400 or so properties she lists range from relatively modest brick and stone manors to palatial expanses with gardens, ballrooms, and enough beds for the ball guests to sleep over. Because many of the properties are owned by municipalities, she travels the country speaking with mayors and town representatives. Sometimes it takes months of meetings to persuade officials to sell what many consider a part of their local heritage.

Makovik faces growing competition, with international real estate companies such as Century 21 and Re/Max adding more historic properties to their portfolio. She says she has an edge as the only company focusing exclusively on such buildings. And with her background, she says she can better relate to her clients—mostly wealthy Russians or Ukrainians looking to park their money abroad. “To sell a castle, you have to be more of a psychologist than a real estate agent," she says. “It can take years to cultivate a client and find the right property."

Lenka Duskova, a broker from Luxent, an agency that specializes in high-end homes in and around Prague, says selling castles is a challenge. Clients love the idea of living in an elegant historic manor, but it doesn't take long before they balk at the costs of renovation and shy away from the realities of living in the biggest building in a tiny Czech town. “It's not an investment," Duskova says. “This is a business for dreamers and enthusiasts."

Price is a big part of Makovik's sales pitch. Castles in the Czech Republic are a bargain when compared with Britain, France, Italy, or Germany, where similar properties typically cost 5 to 10 times more. Relatively inexpensive labor makes renovations more affordable, and Czechs have no inheritance taxes and will give tax breaks to owners who restore historic buildings.

The asking price for the 54,000-square-foot Libejovice chateau and its overgrown 80-acre park in bucolic southern Bohemia is €1.25 million. From a distance, the place looks opulent. On closer inspection, it's a wreck: Icy wind whistles through broken windows, the roof sags, and ripped-up parquet floors are partly covered by cheap linoleum. A floral-patterned stucco ceiling is obscured in places by crude plastic fluorescent lights. The 90 bedrooms share just four communal showers.

It tells the story of 20th century Europe. The Schwarzenbergs (the forebears of the recent Czech foreign affairs minister and presidential candidate Karel Schwarzenberg) lost the castle in a land reform in 1923. The palace was used by the Nazi-era Hitler Youth during the German occupation, then by the Soviet army in communist Czechoslovakia. Each group inflicted its own damage, and communist indifference to aristocratic heritage did the rest. For the dreamers who make up most of Makovik's customers, the heritage and even the dilapidation are all part of the allure. “These people already have everything—cars, private planes, beach houses," she says. “But when they see a historic chateau, their eyes light up. It's like a fairy tale for them."

Source: bloomberg.com