"What is currently happening in Prague is the GDPR,” says Jiri Hornik, Partner at Kocian Solc Balastik in Prague, referring to the EU’s new Data Protection Regulation being implemented across Europe.
"The new regulation that was created last year is really becoming an issue for many of our clients, including large corporations, because the penalties they face (for non-compliance) are very severe, so many clients want to make sure they're compliant.” As a result, Hornik says, “because it requires a lot of changes in the internal systems of companies, we’re seeing a lot of requests from clients — those requests are coming every week.” Indeed, he warns, “it usually takes a couple months to do a complete analysis and ensure they’re compliant — it requires us to go into the company and understand how it works and how the system is designed and then make the necessary changes.” Thus, he says, those companies that put off the process may not get it done in time. "The regulation is supposed to become effective and enforceable in May of next year. And it really takes a lot of time for companies to get prepared — you can’t just do it overnight.”
Hornik agrees that the consulting industry is, at least for a little while, benefiting from the process, calling it “good for business in every jurisdiction in the European Union, where it will generate a lot of work for lawyers and IT consultants.”
In general, Hornik says, “business is fine — I would say it’s growing.” Hornik says KSB’s transactional practice is doing well, but draws particular attention to the increasing significance of compliance for clients, forced to “take into account all the regulatory requirements which are currently in place.” Hornik points to a new requirement in the country that’s creating work as well: “In the Czech Republic we are dealing with a Public Contracts Registry, meaning if you’re entering into a contract with a public entity, that contract must be recorded in a public registry, and failure to register means it’s not effective. The law was implemented last year, and following a one year trial period where the failure to register did not have such impact on the contracts concerned, on July 1, 2017 it becomes fully effective. That increases the burden on the side of clients to ensure their contracts are registered.” Unfortunately, he says, “the problem we have is that the law is not very clear in defining the public entities that fall within its scope and there also are unclear exceptions to its application.”
Hornik says that Real Estate practices are doing really well in the Czech Republic. "Real Estate is booming tremendously I would say, especially in the residential sector,” he says. "The reason is because interest rates remain really low, which generates a huge demand on the side of investors, as everybody wants to buy an apartment, either for their own needs, or to rent it out on Airbnb, which means prices have gone way up.” Hornik claims that the Czech Republic is registering the highest growth in the EU for apartment prices, and “even the Czech National Bank has noticed that the prices are a bit overheated.” According to him, “that means there’s a lot of work in real estate, especially on the part of residential developers.” But it’s not only residential projects that are growing. Hornik points to "a growing market for industrial and logistical projects as well, because the yield from those products is even higher than it is for residential or retail, so many investors are trying to buy completed projects, because it’s a safer investment, which generates even demand for new projects.” Hornik says his firm is "working for the developers who are building new projects, and also for investors who have decided to buy such projects for the purpose of investment.”
Finally, Hornik says, the “upcoming general elections in October will significantly affect the market.” The current Czech government has announced plans to make large investments in country’s infrastructure, he reports, "even considering using PPP projects on the highway projects, as EU funds are difficult to get.” Past PPP attempts, Hornik reports, "were highly politicized, and eventually terminated,” and as a result “for a long time nobody even wanted to hear about PPP.” Still, recent successful PPP projects in Slovakia have encouraged their Czech neighbors to reconsider, and Hornik is hopeful that “if this project succeeds this will generate a pipeline of other projects.” Still whether or not the government gets the opportunity to try may depend on the results in October. “We’ll see how it ends up, because the elections may change that, and it will be quite difficult to make big decisions before the election.” He describes the current period as “a standard pre-election moratorium on important decisions."