Nicholas Kirke - the British entrepreneur who came to Prague in search of his father and founded a property empire

01-10-2007

Our guest for One on One this week is Nicholas Kirke, a British-born property developer who has been operating in the Czech Republic since the early 1990s and whose La Salle property development company now own thousands of square metres of prime real estate in Prague, including the historical Melantrich building on Wenceslas Square.

"In early 1990 I discovered that I had a Czech father. I came over here looking for him. I'd never seen him before. He had served in England during the war with the Czech forces. I came over here and found him."

What was his reaction?

"Well, he went from a healthy shade of brown to being very white. He pulled me into a room very quickly and shuffled me into a hotel saying his wife knew nothing about me.

"It was quite amusing, because several years later she obviously knew who I was. She told then that she knew who I was the minute the door opened because I looked more like him than any of his Czech children."

Did you subsequently establish a relationship with your father and was that one of the reasons why you stayed?

"No it wasn't the reason I stayed. It was a mixture of things. My property empire in the UK wasn't doing very well. So I sold up and decided I wanted to go somewhere different. So I came to the Czech Republic.

"I liked it here very much. It was a big challenge - a difficult environment but just the sort of thing I thrived in. I came out here thinking I'd start a language school but then ended up establishing one of the first real-estate agencies in the country."

I presume the real-estate market had its fair share of shady dealings in the days after the fall of communism...

"What westerners would call immoral behaviour in business, I would generously describe as amoral behaviour in countries like the Czech Republic. There was after all a complete culture of even paying your doctor for quick service. And this still remains. The fact that we had a rather corrupt system here meant that it was slightly endemic.

"Of course, you have to remember that the influential class here was basically the old communist hierarchy. Unsurprisingly, these guys ended up being the same people who did very, very well for themselves when we had privatisation and a free market came into being. They knew all the bank managers; they went to school with them...

"It is a bit smelly and it's quite difficult for a foreigner like me to compete with people who have historical links."

Going back to that era, I remember hearing lots of horror stories about landlords trying to get rid of rent-controlled tenants. There were tales of some building owners ripping out stairwells while elderly tenants were out shopping and they were subsequently unable to get up to their flat. Did you ever come across such shenanigans in your time here?

"I should preface what I'm going to say by pointing out that we had someone in England called [Peter] Rachman who wasn't averse to beating up his tenants and doing all sorts of horrible things in London.

"What I've seen in Prague is no worse than what I've seen elsewhere. Of course, there are enormous incentives for landlords to strong-arm their tenants out of the properties.

"I remember a man coming to me and saying 'I will empty the house'. I said 'How will you empty it?' He said he would take the roof off..."

"You can get that type of bad behaviour but I don't think it's any worse here. For myself I can say I haven't had a problem. I've probably moved up to about 150 families from various properties in the Czech Republic.

"I've moved them to flats that are generally better or they have had compensation that has allowed them to buy their own places. So it's a win-win situation for both parties."

Photo: European CommissionPhoto: European Commission On the subject of regulated rents, a group of property owners are now bringing a case to the European Court of Human Rights where they are suing the Czech government for loss of revenue due to unfairly low regulated rents. Do you think this action is justified or is it just an avaricious exercise?

"No, not at all. I think the parties bringing the case are quite justified. But then again - maybe I've lived here too long and become a bit socialist - but you've got to remember that sitting tenants in Prague properties didn't take over the properties themselves. They were allowed to be there. They were placed there by the authorities

"For example, in the houses I own some tenants have been living there for 70 years. They've lived there all their life. Bear in mind that average incomes in this country outside of Prague are really derisory. We can't really ask market rents from people who don't earn enough money.

"People often talk about sitting tenants in the Czech Republic as if they were some sort of pariah or as though they were there illegally. They are not. It's their home and they should be treated with respect.

"I agree that rents should continue to creep upwards. And they are doing so."

What are the biggest changes you've seen in the Czech real-estate market in the years you've been operating here?

"I would say the biggest improvement I've seen here is the reduction in bureaucracy. Going to the Land Registry used to be a half-day event. Now everything is electronic and you can get your business completed in 20 minutes.

"The same applies to a trip to a notary. Once again all the procedures have been speeded up enormously. There's a lot of paperwork in Prague, but then again there's a lot of paperwork in France, for example. I'm very happy with the way business life is going in Prague."

Are there any major developments still to come in the Czech property market?

"Mortgages I believe are still in their infancy and I would love to see some British banks coming out here and getting licences. I believe once the money supply improves for the ordinary citizen here, there will enormous expansion in apartment developments."

One issue that crops up a lot when I talk to people involved in property development in the Czech Republic is the role of preservationists. Some people say that they are far too zealous here, especially in Prague and sometimes even hinder the restoration of buildings that would otherwise be falling down. Would you subscribe to that view?

"Absolutely not. Please go to Odessa and see a modern tower block emerging out of a beautiful, architecturally brilliant building. It's a monstrosity.

"What I am cross about is that the historical departments only woke up to the fact that they should preserve the historical aspects [of buildings] in the last few years or so. If you walk down Wenceslas Square, you'll see one or two buildings and you would think it is quite extraordinary that they were allowed to be built.

"Of course, it's a pain. It's a pain for me. I bought one of the most historical buildings in the Czech Republic - the Melantrich building on Wenceslas Square. I've had my fill of the historical departments, but I appreciate that they have a job to do."

Do you think you will stay in this country? Is this place home to you now or do you see yourself moving back to the UK?

"No, I won't move from here. People often ask me if I like being here. And I say 'No, I don't like being here, but I don't dislike being here. This would have been the response I would have given in England.

"Here is where my business is. I feel that the Czech Republic is still vibrant and it's developing. Perhaps I'm a typical ex-pat, but when I go back to England, I am dismayed. I feel that the fabric of our society and our shopping centres etc. is deteriorating. The hospitals are deteriorating.

"When you come to Prague, everything seems to be on the up and up. There's an air of optimism and that's very gratifying."

01-10-2007