Slovakia - Eight Regions - Many Opportunities

Slovakia is divided into 8 self-administered regions, each having its own capital: Bratislava, Trnava, Trencin, Nitra, Zilina (western Slovakia), Banska Bystrica (central Slovakia), Kosice and Presov (East).


* TRNAVA & ZILINA *
(www.trnava.sk, www.zilina.sk)

Most of the wealth is concentrated in Bratislava followed by other main western Slovak cities. These are also likely to be of most interest to a property investor. The reasonsare simple - solid economy, growing investments (foreign as well as domestic), excellent infrastructure, favourable business environment.

This, along with relatively low unemployment and higher prosperity of the population makes Trnava, Zilina, and to a lesser extent Trencin and Nitra into exceptional markets for those looking for untapped opportunities... including low prices, low competition, and potentially high returns.

Trnava and Zilina are perhaps no longer a secret tip in Slovakia, but are still virtually unknown abroad. Both of these historic cities have lots in common:

- great infrastructure and accessibility (air, road, rail)
- fast growing economy
- rich history, culture (as well as being main university towns)

Trnava further benefits from the proximity to Bratislava, while Zilina - Slovakia's 3rd largest city - is close to the Czech and Polish borders, as well as located in a very significant tourist region, with top ski resorts, thermal spas, and historic monuments just a short drive away.

Most importantly, both Zilina and Trnava are getting a massive economic boost set to transform the cities and their population. They have received the largest foreign investments Slovakia has ever seen -

In late 2005, PSA Peugeot Citroen completed their Trnava car plant starting to produce 300,000 cars p.a. from 2006 (as well as announcing construction of a second smaller plant by 2008)...

... while one of world's fastest growing car makers, Korean giant Kia Hyundai, is building their first-ever European production base - in Zilina - a huge 1.1 billion euro investment. Production of 300,000 cars p.a. should start in 2007.

Zilina and Trnava have a solid property market backed by the relatively wealthy population, with high demand for good quality property and new construction. However, and importantly for a property investor, they now also offer something most areas of Slovakia don't - a strong and growing rental demand.

After all, 10,000+ new jobs are to be created in each city, attracting thousands of workers from all over the country, as well as foreign staff. The population of Zilina (ZA) and Trnava (TT) is set to grow significantly in coming years, further fuelling the local property markets.

Key facts for property investors in ZA & TT:

- demand for new & good resale properties many times higher than supply
- solid capital growth expected on quality properties
- the only viable (albeit new) rental markets outside Bratislava (not counting holiday lets in tourist areas)
- low prices compared to the capital (new built flats in Trnava at GBP 650 - 720/m2 incl. VAT; new apartments in Zilina at GBP 550 - 880/m2 incl. VAT)


* TRENCIN & NITRA *
(www.trencin.sk, www.nitra.sk)
While the residential market in Trencin and Nitra doesn't currently offer much potential to an investor looking for rental, these relatively wealthy towns will no doubt see a growing property market in the coming 3+ years. With a lack of a current rental market investors may want to keep an eye on the two towns and any potential larger investments they may receive in the future.

New developments are rare at the moment, with one or two new apartment blocks in Nitra being sold at approx. GBP 550/m2 incl. VAT.

The more adventurous commercial property investors may find good opportunities in retail and mixed-use properties in the town centres of Trencin an Nitra, offering low prices and solid yields. While similar properties are virtually impossible to get ahold of in the hot markets of Trnava and Zilina, Nitra and Trencin are not yet on the investment companies' radar.


* BANSKA BYSTRICA *
(www.banskabystrica.sk)

Banska Bystrica benefits, to certain extent, from its proximity to popular ski resorts in the Low Tatras and Velka Fatra mountains. However, it is not close enough to offer a viable holiday let alternative, while long term rental market is also virtually non-existent.

What's more, the city is in one of Slovakia's economically weakest regions, with relatively high unemployment and less than ideal infrastructure.

Although the ski resorts are starting to offer some tourist letting opportunities, other areas of central Slovakia (including Banska Bystrica) are unlikely to attract property investors in the short-medium term.

Prices in BB are low, corresponding to the economic situation; new properties can be had from around GBP 400/m2 incl. VAT.


* KOSICE and PRESOV *
(www.kosice.sk, www.presov.sk)

The eastern parts of Slovakia belong to the least developed and economically worst-off areas, with 20%-30% unemployment, poor infrastructure and little investment. The respective regional capitals of Kosice and Presov offer accordingly limited opportunities in terms of property investment.

Kosice may attract some of the most adventurous buyers focusing on the size of the country's second largest city. While there are some pockets of relative wealth in Kosice (compared to the rest of eastern Slovakia) it is in the middle of a very poor region and we don't expect stable returns on investment in this area at present.

New built properties in Kosice can be bought from approx. GBP 450/m2 incl. VAT.

The Presov region is the most troubled part of the country, with little hope for any serious improvement in the medium
term.

The general consensus is until there is a significant infrastructure improvement in eastern Slovakia, major
investment will keep avoiding this part of the country. The badly needed highway connection should be extended
to Kosice in approximately 10 years time. (Currently the highway runs from Bratislava up to Zilina.)


* TOURIST AREAS *


For those looking for holiday lets as well as, potentially, own use of a vacation home, Slovakia's top 5 ski resorts provide a good alternative and growing rental potential.

The country's five star ski resorts are:

Jasna, Donovaly, Velka Raca - Oscadnica, Strbske Pleso, and lately also Plejsy.

The ski resorts are in fact dual season, highly popular in winter as well as summer. The visitor structure is split between Slovaks and foreigners (most from surrounding countries). Although property prices in the resorts are often comparable to Bratislava, good property will likely continue to see solid growth as a result of very limited supply (severe building restrictions in what are mostly National Park areas with high protection degree).

Some of the gateway towns for ski areas such as Poprad may offer limited holiday let potential, but, if rental
income is important, buying closer to the slopes is a much safer option. While visitors often stay in Poprad for a
day or night, the majority will not be willing to drive or 30+ minutes each day to get to the nearest slopes.

Some of the (many) spa towns in Slovakia have good tourism potential, however, visitors tend to stay in hotels to
have spa and medical treatments, accomodation and catering all under one roof. Hotel capacities are more than sufficient
in all Slovak spas; accordingly, private letting is unlikely to be profitable.


* OTHER LOCATIONS *


In general, other areas of Slovakia are unlikely to offer much to a property investor for the foreseeable future. For those looking for a cheap holiday home there are plenty of picturesque locations and villages that may just suit.

However, no price growth or rental potential can typically be expected. A good example are homes in the many small villages throughout all regions of the country. With no economic perspective and leaving population property prices are very low - houses can often be had from GBP 10,000 (particularly in central & eastern Slovakia and the poor areas of the south, close to Hungary border). And, they are likely to stay at similar values for the next many years.

Naturally, locations close to Bratislava benefit from the proximity to the capital and its strong economy, and accordingly property prices are higher.

From the February 2006 Slovakia Investment Property Newsletter

Bratislava - Eurovea waterfront development

Bratislava - Eurovea waterfront Development

What is the city going to look like around the Eurovea waterfront development? The area is commonly referred to as "The Ballymore area." It is interesting to look into what is expected in its immediate neighborhood, as well as across the river, by 2010.

Ballymore advertises its project as "Central Europe's most sophisticated mixed-use riverside development." with "Over 200,000 sqm of corporate offices, retail galleria, hotel, casino, multi-plex cinema, riverside apartments and waterfront park." The city is expecting 150 shops, a 200-bed 5-star hotel, 23,000 m2 of office phase in the first phase (with 87,000 m2 office planned for the 2nd phase), and 250 Danube apartments there.

With the completion of the Apollo Bridge in Sept 2005, the fifth bridge over the Danube, the vast areas on both sides of the river in this absolutely central location suddenly became accessible for development, where the standard was set by this beautiful state-of-the-art bridge. The Capital City claims: "Contemporary strategic investments in Bratislava are now being focused on the Danube River banks. The main bus and railway stations will also soon undergo substantial changes."

There are major plans submitted regarding high-rise residential and commercial buildings, as this is the area (on the north bank of the Danube) specifically zoned for skyscrapers in Bratislava, where the maximum height allowed is 125 meters. The neighboring Old Town only allows for 19.5 meters, that is 5 floors plus roof. One developer has already received permits to construct 8-10-floor residential and office buildings, 10-12 city blocks in all.

There are plots for sale, along with planning permit. For example one residential developer has received permission to build 75,000 m2 sellable floor space according to current plan, however, is redesigning in order to make it 100,000 m2, will be ready Aug-Sept 2006. Currently there are 204 units in four buildings, where smaller investor-friendly apartments, 1-beds, 2-beds are planned. They will be ready to sell off-plan by Aug 2007, early 2008, and the buildings will be completed in 2010. Construction costs are estimated at 650-700 mln SKK (17.5-19 mln EUR), the builder will be Skanska and/or Strabag. Prices would be 48,000 Sk (1300 EUR) /m2 + 19% VAT. They would prefer to sell the whole project off-plan to a single investor. They also need an investor for a hotel in same location, for an advance contract with hotel improves developer's position with the banks. This is just an typical example of what is happening behind the scenes in this newly created administrative and commercial center of Bratislava (Central Business District). Send an email to info@blavablava.sk for more info.

HB Reavis is building the new bus station in Nivy. J&T Global is planning 3 further 100 meter-tall towers around Tower 115 (Press Center), the tallest building in the city.

With regard to the municipal plan, the city also puts great emphasis on a new all-city center situated on the right bank of the Danube, opposite the Ballymore investment, where a state-of-the-art multi-purpose hall seating 12,000 people is envisaged. This will primarily be an area of office buildings to take advantage of the superb Danube views and excellent transportation along the motorway connecting the airport and Eastern Slovakia with Austria, the Czech Republic, and Hungary. It is also just across the river from the city center, so residents and employees in the high-rise buildings will enjoy the classical Castle view. This is where the Vienna Park Apartments are located, the first residential and commercial project to begin sales in this new business district. http://blavablava.sk/vienna.htm The ground-breaking venture on the right/south side of the river was the successful Aupark shopping-entertainment mall, the largest and most successful regional shopping center in Bratislava, with a guaranteed property return of 7.75%, which is being expanded by HB Reavis with an investment of 54 mln EUR. There are already a number of A-class office buildings along Einsteinova Street, where the Digital Park, opposite Aupark Mall, will be one of the most prominent points of attraction for commercial space. www.digitalpark.sk.

You can still reserve residential or commercial space through CE Invest in these riverbank developments, where the city will never be the same again. We will send you visualizations of what the district will look like by 2010, from the city planning office, upon request.

From the March 2006 Bratislava Property Newsletter available at
Blavablava.sk

Rental Market in Slovakia - Overview

Over the last two years Slovakia has been attracting growing numbers of mostly British and Irish property investors looking for buy-to-let opportunities. Although the numbers of foreigners owning residential property in Slovakia are still very low (in the low hundreds by estimate), they will increasingly make a disproportionately significant impact on the country's rental market.

To start, there aren't many rental markets in Slovakia in the first place. Slovaks are owner occupiers; owning a home is the #1 goal for anyone passing the age of 20.

The country has a 95% owner occupancy rate. Only 3% of property is privately rented (further 2% are municipal flats rented to socially weak families).

In the years following the fall of comunism (1989), families - until then living in yments for any given property are (mostly significantly) lower than the rents (for such home).

So, are there any potential tenants, and who are they?

Well, to answer this question, we need to be more area- specific. There are very few rental markets in Slovakia (larger cities having either a large expat community or/and student population), while most smaller to medium towns (and of course villages and countryside) have no rental demand at all. Generally speaking we see two types of tenant.

The first group - students, low income workers, new migrants - rents cheap apartments at rents of 200-300 euro per month, mostly shared by several people. Typical properties are communist built "panelak" flats in areas such as Petrzalka(Bratislava V), and parts of the districts II and IV.

Although rental yields of such properties can be reasonably high (rented on a shared basis), they are unlikely to be a target of property investors. The reason: communist flats are no longer experiencing any capital growth and are, in fact, going down in price in many areas.

The second tenant group consists of foreign expat tenants and companies. The largest and longest established market catering to expats is Bratislava, with one or two secondary cities currently seeing a surge in demand due to significant foreign investments and new concentration of international companies (the new car centres of Trnava and Zilina).

Foreign tenants are, however, very particular in terms of property and location, especially in Bratislava, that is not only geographically larger but also offers a wider supply of quality property.

The area of choice for most expat tenants is the city centre (BA I). Good quality flats in well maintained blocks can be rented out at 500-800 euro/month for 1 beds, and 700- 1,200 euro for 2 beds. Larger apartments can achieve up to 2,000 euro/month, however, most foreign tenants look to spend a maximum of 1,000 euro for a 2 bedroom apartment. Rental yields currently range from 5-8% p.a. gross.

Newly built properties with parking can be let (in BA I) at 20% higher rates as they are extremely rare in this area (virtually all property in the city centre consists of classic pre- and post-war blocks; as the name of the 1st
district implies, it is the 'Old Town').

Investors with preferences for new built properties will usually have to look outside the historic city centre, yet should opt for the shortest possible distance to
the centre itself. The further outside of Bratislava I,the lesser demand there is from foreign tenants and companies.

So, while new built properties are popular in Slovakia (with Slovak buyers = owner occupiers), they are not necessarily a sure let. What matters most is a central
location, and high quality property; Whether new or classic (pre-war that is, not communist built) is less important.

Plus, given the extremely high demand for property in the first district, and no new supply, the city centre has also been the area of highest price growth over the last
few years.

Stare mesto (Old Town, BA I) has always been the location of choice for many wealthier Slovaks to buy a flat - or, at the very top end, a villa on the Castle Hill - and this demand will certainly continue for the foreseeable future.

A new factor over the recent year or so are the increasing numbers of foreign buyers purchasing in Bratislava. Although the overall numbers are very low, and as such have no impact on property prices, they will be noticed in the
rental market.

While 99% of property is sold to Slovaks who are mostly owner occupiers, most foreign buyers are purchasing flats with the objective of letting. In a limited rental market, even a couple hundred new rental properties can make an impact. Therefore, as more properties are purchased by investors, increasing the supply of good quality rental property in Bratislava, the tenants, until recently having few options of high standard property, will have more choice.

This may create downward pressure on rents (to a lesser extent) and, more likely, increase the void period between tenancies. Increasingly, estate/letting agents with good links to foreign companies with offices in Bratislava will be of advantage. Companies tend to transfer a larger number of staff to Slovakia at once, which often creates cycles of very high to low rental demand.

While the Slovak property market continues to offer some of Europe's best opportunities, with low prices and healthyand solid growth (for the right type of property in the
right area), it is important for an investor to understand
the dynamics of this market.

The correct choice of a (central) location with solid present rental demand, and good quality property (high standard fittings are increasingly making a difference)
are pre-requisites for successful letting in Bratislava.

And, of one thing you can be sure: as virtually all property sales go to locals, 95% of whom, as we have seen, are owner occupiers in their (family) apartment or house, you will always be able to sell your property on to a Slovak buyer,
ensuring a safe exit strategy.

From the January 2006 Slovakia Investment Property Newsletter

Pre launch investment opportunity : Luxury Villas Poland

Pre launch investment opportunity:
Mountain & Lake Retreat in Krakow Poland

The Dates for you Diary Are 5th , 6th, 7th August

Churchill Properties have recently announced details on a brand new mountain and lake retreat development. The development offers excellent skiing and sailing opportunities near by. Only 29 of these luxury villas are available with prices stating at 153,000 TBC.

Interested parties are invited to the Czorsztyn Lake Regatta!
Experience the beauty of “Osada Czorsztyn” natural surroundings! “Osada Czorsztyn” is going to be the most exclusive recreational housing development in the area, its design combining the traditional and futuristic elements. We hereby offer you an opportunity to appreciate this project - take part in Czorsztyn Regatta, spend a weekend exploring the wonders of Czorsztyn region.

Departure is from Cracow to the investment site. This is followed by a meeting at investment the site, an on site inspection of area, meeting with the party responsible for the investment.
We travel then by water tram to the historical “Osada” (Settlement) building and meet in the conference hall for a multimedia presentation of the investment. A discussion panel will follow.
Crossing over to the opposite bank of the lake by boat, we visit the ruins of the Castle in Czorsztyn. Free accommodation is available for investors in the castle of Nidzica, including a
traditional meal. Folk music concert on the “Biala Dama” boat is followed by drawing of lots and announcing regatta pairs. Main prize: L10,000 discount on purchase of any “Osada Czorsztyn” house. Return to castle, free time, and integration party in caf on the dam.

Contact Churchill Overseas to reserve your place and to take advantage of this exciting prelaunch investment opportunity. Telephone +44(0) 1983 550400 or email Churchill Overseas info@churchilloverseas.com>

Regulated Rents in Post Communist Countries

From the most recent issue of the Czechpoint101.com newsletter by Nathan Brown

Regulated Rent

Regulated rent is a real issue in the post-communist countries of Central and Eastern Europe. Its purpose has been to keep accommodation affordable for all citizens but there are problems that are arising.

Under regulated rent, a tenant is only obligated to pay a fixed fee for the rent and this rate is not controlled by the actual owner of the apartment or block of flats. It can only be passed on through immediate family members and applies to that particular apartment only. The tenant cannot move to a bigger flat and still enjoy rent control unless they do this through the underground regulated rent swapping market.

Currently it is estimated that there are about 750 000 flats under rent control in the Czech Republic. This is almost fully one-fifth of occupied flats. Around 300 000 are privately owned and the rest are owned by towns or villages.

An example of how this affects landlords recently came to light with a client from the US who is partial owner in a block of flats in Prague. She is an absentee co-owner and asked us to help advise her on matters pertaining to her property. She has a tenant who enjoys regulated rent in a 1 + 1 (studio) flat in the building. This tenant pays a mere 1 800 CZK/month when the actual market value is at least 10 000 CZK/month. She had been approached by the tenant offering to be bought out for 400 000 CZK so that she could move the apartment into the free market. This is a common approach to getting apartments into the free market but is quite costly as you can see. For this owner however, there are two options. One is to take the payout. With this decision she will get payback within 5 years considering rental rate increases and the added value that her property has. The other would be to wait for legislation to move the apartment into the free market. Why is this an option?

Recent filings at the European Court of Human Rights in Stasbourg have shown that owners are not happy with the situation and the governments are going to be forced to revise their laws sooner rather than later. One complaint, lodged by the Association of Homeowners (OSMD), involved a filing for compensation for the losses caused by rent regulation in the 16 years since the fall of communism. As reported in Czech Business Weekly, Libor Dellin, deputy chairman of OSMD said that when the court decides in favor of the property owners, each of them will require a minimum compensation of 10 000 EURO (340 000 CZK). Another homeowners association, the Movement for the Protection of Property Owners (HOMR), has filed a similar complaint, hoping to be awarded compensation from the state of up to 1.7 billion EURO (50 billion CZK).

Why do they feel so confidently about their cases?

The Strasbourg court recently ruled in favor of a Polish landlord who had accused the government of violating her human rights by maintaining rent controls. The court ruled that the government’s action of regulating rents at the expense of property owners was illegal and against human rights.

How have these developments and others affected the regulated rent market in the Czech Republic?

A recent bill proposed by the Ministry for Regional Developments (MMR) on June 14th suggests a gradual rent deregulation beginning in October 2006.

The Minister of Regional Development, Radko Martinek, has proposed that rents should, on an average, grow by 9.3% annually to within 5% of the market value. He is suggesting this increase should take place from October 2006 until 2012. Rents would increase most in Prague and Brno but would not grow at all in some areas like Zlin.

Will all of these changes come to pass? There is strong lobbying on both sides of the issue and time will tell. Many are taking the opportunity to gamble on the chance that these changes will come sooner rather than later and are buying regulated rent apartments at the current below market values.

We will strive to keep you informed of any further developments in this area that would affect investment in the Czech Republic.

Foreigners Ever Keener to Buy Property in Slovenia

EU citizens are increasingly interested in buying real estate in Slovenia after restrictions were lifted following EU entry nearly one year ago. Some 500 properties have been sold in the first year, according to the Tax Administration, mostly at the seaside and in the northeastern region of Pomurje.

The Ministry of Justice does not think the figures are alarming and said there is no need to invoke the safety clause to protect the property market. Sales will level gradually and the opening of the property market will probably not have a negative impact on supply of real estate for Slovenian citizens, the ministry has said.

Real estate agents, meanwhile, stress that most buyers come from Great Britain, Italy, Germany, Austria, Ireland and Spain, although most purchases are done privately, not through agents.

While buyers who opt for the plains of Prekmurje most commonly buy houses (old buildings can be had for as little as SIT 5m (EUR 21,000), those buying at the seaside tend to opt for apartments and condos.

British buyers are at the top of the list in both regions, which real estate agents says is probably the results of cheap flights from London to Ljubljana. Agents from the Primorska region have also said that Britons who buy property tend to be working class, while Austrian and German buyers come from the upper and middle classes.

The Gorenjska region is also exceedingly popular, and although only ten percent of all properties sold to foreigners are in the region, agents say that foreigners, especially Britons and the Irish, buy up 70 percent of all real estate on the market. The ski resort Kranjska Gora is the most popular location, followed by the picturesque lakeside resorts of Bled and Bohinj.
According to the property agents, foreigners come here to buy houses, but when they see that prices are much higher than in Poland or Slovakia they typically opt for condos or apartments instead.

Prices have so far been rising due to the ongoing development of the resorts, by 10 to 30 percent. But the agents expect that the raising demand will push up prices even further.

Slovenia is one of the few EU members that have fully liberalised their real estate market for EU citizens following EU entry. The country has negotiated the option of invoking special safeguarding measures in case of excessive demand that would push up prices, but this looks unlikely to happen at this point.

The Read Deal on Buying Property in the Czech Republic

For those who want a real insiders view on the reality of buying property in the Czech Republic, check out Czechpoint101.com. The information on this website is alarmingly honest, revealing quite frankly the risks of investing in property in a former communist country, still trying to overcome a culture of fraud, mistrust and extremely bad business ethics …

Though many agents working in the Eastern European property market may experience a similar culture, very few choose to discuss it on thier website. Czechpoint101, owned and managed by Nathan Brown, provides extremely high quality information on the property market in Brno and Prague and also has some excellent reading material available to download.

For more details on buying property in Brno or Prague … Czechpoint101.com

The Newsdesk Has Moved

The Newsdesk has now moved to the new and improved website PropertyNewsdesk.com where you will find the best property information, news and resources out there. Stop by now

My thanks to those who have supported the Newsdesks here at blogger.com and to Google for the fantastic service.

See you at the PropertyNewsdesk.com

Tracey Meagher

Balkan Tiger Goes on the Prowl

For the Record: 3 May 2005, Tuesday.

By Ambrose Evans-Pritchard
The Telegraph

The Romanian and Bulgarian stock markets have both tripled over the past two years in anticipation of imminent EU membership, but analysts insist there is still plenty of money to be made in the 'tiger' economies of the forgotten Balkans.

With per capita incomes less than 30pc of the EU average, these two ex-Communist basket cases have turned their countries inside out in a frantic effort to comply with the Acquis Communautaire, the 90,000-page EU rule book.

Both have now been granted the EU's coveted status of "free market economy" able to withstand the full rigours of Europe's single market. Barring an upset veto by Euro-MPs, they have a guaranteed entry date of January 1, 2007.

Geoffrey Van Orden, a Tory MEP and the European Parliament's spokesman on Bulgaria, said it has been the prospect of EU entry - and the strategic imperative of a safe berth beyond Russia's clutches - that helped former Communist regimes stay the course on radical reforms.

He said: "One of the few good things about the EU is that it serves as a pole of attraction for failed states. These people suffered terribly under Communism. It is the lure of joining the club of democracies that has given them the impetus to see through some very tough decisions."

Romania's economy grew at 8.3pc in 2004. More than 96pc of the land is now in private hands under newly issued property deeds. The total private sector accounts for almost 70pc of GDP, arguably making the country more "free market" than Britain, where the private sector only accounts for about 60pc of GDP. A new flat tax of 16pc is being introduced.

The pro-American government of Calin Popescu Tariceanu, a wealthy entrepreneur, is privatising the state behemoth left by the Ceausescu regime at breakneck speed. Some 550 nationalised industries are on the auction block, following the sale - or outright closure - of 486 state firms between 2001 and 2004. The country's biggest employer, the state oil company Petrom, was sold to Austrian investors last year.

The biggest steel plant, Galati, is now in the hands of the Anglo-Indian steel baron Laksi Mittal, after Downing Street intervened directly to help smooth the takeover. Renault has bought the state Dacia car production plant, now a profitable business.

Last year, the credit rating agency Fitch upgraded Romania to "investment grade", and Standard & Poor's is expected to follow suit this year. The country has a population of 22 million.

Plamen Monovski, manager of Merrill Lynch's Emerging Europe Fund, said Bulgaria was in better shape than Romania after a genuine "supply side" revolution pushed through by ultra-liberal governments. The current prime minister is the former child-king Simeon Saxe-Coburg, who returned triumphant after half a century in exile.

"The banks went bust in the hyperinflation at the end of the 1990s, but now they have all been sold to foreigners and are incredibly stable," said Mr Movovski.

"The vision of EU accession has been a very powerful anchor. The Maastricht criteria for joining the euro have forced the government to bring its budget under control," he said.

He said the Balkan bond market was "played out", with spreads over core eurozone debt already very narrow.

Last year, car sales rose 46pc and property prices by 31pc, one of the highest rates in the world, with 5.7pc GDP growth forecast this year. However, the IMF has warned against overheating.

Even so, Mr Monovski said the equity and property markets still had potential. "Property prices are still very low compared to areas of similar beauty and geography. Bulgaria is a country where you can ski six months of the year, yet there are lovely beaches not far away," he said.

Merrill Lynch warns that Romania needs to tackle its unreformed banking system, still dominated by two dinosaur state banks.

Mr Monovski's best tip: Romanian and Bulgarian farm land. He said: "There are huge opportunities in agricultural land. This is a very fertile area with a good climate, going cheap."

But buyers should tread cautiously. Mr van Orden said Bulgaria and Romania were still hampered by the legacy of communism: dodgy courts, crooked police, corrupt civil servants, and a crime network with a deep reach into the state apparatus.

Mindful of the warning, Romania has sacked 40 police commissioners, frozen the bank accounts of 42,000 companies, and launched a blizzard of anti-graft inquiries.

The prime minister has sought to soothe sceptical French and German Euro-MPs, saying: "Major changes won't happen overnight, but corruption and the arbitrary will of bureaucrats are no longer the law. The next ten years shall make Romania reborn into a modern European country."

Bratislava A Great Place To Buy - Once You Find It

Bratislava is the new Prague, and Irish people would love it if they knew where it was, says Derek Scally. Many who do are investing in apartments costing from around €35,000 that offer decent returns.

Bratislava is everything Prague isn't. While the Czech capital's city centre is a noisy, dynamic and dirty place, the Slovak capital is a quiet, clean, pleasant city.

The 1993 dissolution of Czechoslovakia left Bratislava somewhat in the shadow of its larger brother to the north. But in hindsight, that may not have been a bad thing, considering present-day Prague's souvenir shop scars of mass tourism.

The flourishing city on the Danube, long an insider tip, is finally emerging on the radar of tourists and investors alike. The property market here is smaller than in other central European cities like Budapest or Warsaw, but rising prices and a decent supply of new developments mean it's a good time to get on board.

The Irish are the largest foreign investors in Bratislava, mostly due to the presence of Ballymore Properties, Sean Mulryan's development company. which is the driving force behind Eurovea, which it calls central Europe's largest mixed-use riverside development. The ambitious scheme will essentially give Bratislava an entirely new urban district - and a main shopping street the city lacks - with over 200,000 sq m (2.15m sq ft) of office, retail and apartment space.

However the interest from Irish private investors in the residential market has been modest though agents say things have picked up significantly since the start of the year.

"A lot of that is down to Irish ignorance. Lots of people don't know where Bratislava or even Slovakia is. They confuse it with Slovenia," says Billy Norton, founder of the Norco property agency. "But a lot of interest has moved down from Prague because property prices there have risen so much."

Slovakia has a population of five million and is sandwiched in central Europe with five borders to the Czech Republic, Austria, Hungary and Ukraine. Bratislava, once the capital of the Ottoman Empire, has a population of 450,000 and is 30 miles, or an hour on the train, from Vienna - closer than Navan to Dublin. By the time the long-awaited intercity motorway opens in 2007, the commuting time for motorists will drop to just 40 minutes.

There are no direct flights from Dublin but the city is served by low-cost airlines Easyjet and Slovakia's own SkyEurope.

Slovakia spent much of the 1990s in political isolation thanks to the despotic prime minister Vladimir Meciar, whose openly corrupt privatisation drive and regular nationalistic outbursts alienated EU, NATO and the US. But the present centre-right government of Prime Minister Mikulá Dzurinda has pushed through necessary, if unpopular reforms, and last year lead the country into NATO and the EU.

Slovakia has had a strong economic performance of late, with 5.5 per cent growth last year and forecast 5.8 per cent growth this year.

Slovaks are among the lowest paid people in Europe with an average monthly income of around €500 a month. But the arrival of large multinationals in Bratislava has brought with it a growing expat community.

"The rental market is very strong. All the properties we manage are fully rented and we deal with a circle of businesses which are looking to rent all the time," says Norton. "At the moment we are getting investors 8 per cent yield, sometimes 9 per cent." Properties sell within days of coming on the market in Bratislava.

Apartments on Norco's books at the moment include a 34 sq m (365 sq ft) apartment for SKK1,300,000 (€35,000) up to a 100 sq m (1m sq ft) apartment for SKK 4 million (€104,000).

Norco concentrates on apartments in the so-called "golden triangle" of the old town, saying that newer developments further out are less attractive.

But Mayoman Pat Loftus, founder of the Slovak Real Estate Agency, is of another opinion.

"Everyone wants to buy in the old town and there is a premium already. It's not impossible but it's a lot of work to find something reasonable at a reasonable price," he says. "Of course it's a trophy, but it's like Ireland where people didn't make less money by investing in the suburbs rather than in Temple Bar."

Until recently Bratislava suffered from a shortage of apartments and developers were selling apartments from the plans by word of mouth. New developments have changed the market so that it's easier to find an apartment; however the days of 20 per cent annual property appreciation are also in the past.

There's no stamp duty in Slovakia and apart from lawyer's fee of around €500, there are no hidden charges, says Loftus. Still, he says Bratislava is not necessarily the best place for first-time investors or investors looking for a quick return.

"The people buying at the moment are more educated investors; 80-90 per cent are accountants or bank managers. For someone without a second property in Ireland it's too much of a jump," he says. "I wouldn't pay too much attention to talk of yields either. Capital appreciation would make me more excited than the rental returns. If the rent comes close to meeting interest you should be happy."

Loftus is currently selling apartments in Axton, a new development due for completion in October in the Ruzinov area close to the old town.

The development offers one- and two-bedroom apartments from 60-80 sq m (645-861 sq ft), with prices starting at €93,000 and €105,000 respectively. The apartments have a good quality finish including a tiled bathroom and video security phones but no fitted kitchen.

The company website offers an excellent interface allowing browsers to explore the development floor by floor, apartment by apartment.

The development is located next to a new business park with a large number of foreign companies.

"I would be aiming to rent these apartments out to expats, as well as Slovak bank managers and company directors for anything from €400 to €600 a month," says Loftus, who is currently negotiating exclusive deals on other new developments.

Irish agents say that when it comes to investing, cash is king in Bratislava, but special foreign investor mortgages with 4.5 per cent interest rates are available from banks such as Bank Austria-owned HVB.

© The Irish Times

The Estonian Property Express

The Estonian Property Express, published in The Times 29th April 2005
By Sarah Marks
Investors are packing their bags for Tallinn to try to beat the rush

ASK DARREN GOODSON to speculate on the next big thing in overseas property investment and he will put his money on Tallinn. So certain is the London businessman of a long-term property boom that he is liquidating a substantial part of his UK buy-to-let portfolio to invest in the Estonian capital. And he has convinced his brother, business partner and two other friends to buy there too.

They are not alone: when Ryanair and easyJet added the Baltic states to their schedules canny investors took note. Fly-to-let investors have already made their presence felt in Prague, and budget airlines, whether serving the tourist or business market, now routinely feature in lists of key economic indicators drawn up by property investors evaluating distant lands.

Estonia's medieval capital is regularly promoted by the travel industry as the new Prague, but whether this tiny city of just 411,000 is the new property hot spot remains to be seen. Darren, who runs a printing and publishing business in the East End, has no doubts: he has bought three new one-bed flats just outside Tallinn's Old Town and plans to sell three of his eight London properties to buy another ten flats in the city in the next 12 to 18 months.

An amateur property investor even before he left home in Redbridge, Essex, at 21, Darren, now 32, spotted Tallinn's potential when he visited an old schoolfriend working in the country's telecommunications industry three years ago. His friend had fallen for an Estonian girl, but Darren was in the mood for finance, not romance. "At the time Estonia was on the verge of joining the EU, and by speaking to locals I found out prices were going up by 10 to 15 per cent."

Over the next 12 months he did his homework and he liked what he saw. Estonia's GDP grew by 4.7 per cent last year, and the country is attracting large amounts of foreign investment, including substantial European Union grants for infrastructure projects. More than 250 subsidiaries of international companies have been established here since 2003, many from Sweden and Finland (Helsinki is just 1½ hours away by hydrofoil).

Much of the housing stock is poor, Soviet-era concrete blocks. With wages and living standards rising, the pan-Baltic estate agent Ober-Haus predicts that demand will easily outstrip the supply of new-build properties.

A key indicator for Darren was the construction index, which rose by 6.2 per cent last year. "That's a good indication of a rising property market," he says. "Those building costs have to be passed on to the consumer, which means the price of new houses will increase, at least in line with the construction index. This in turn should push up second-hand prices."

Darren also discovered that Estonian banks are willing to lend up to 95 per cent of a property's value, provided that monthly payments are not more than 40 per cent of take-home pay.

Darren, who lives in London Docklands, says his investment decisions are not emotional, but he is an avowed fan of Tallinn. "I liked it from the very first time I went there," he admits. "It's a beautiful place. They're very nice, friendly people, and they've got a good service culture. I like the village atmosphere of a small city - you get a feeling of importance there, whereas in London you can feel like a lost soul."

Wisely, Darren's choice of property reflects his experience in London. He reserved a one-bed apartment in a new building in the fast- growing commercial and residential ring just outside the old city walls. Darren paid £45,000 for his initial 50 sq m flat in 2003 and £50,000 for a further two. His brother Gary paid £61,000 for a similar-sized apartment a few months ago.

Darren put down a 25 per cent deposit and took out an interest-only mortgage with an Estonian bank for the balance. He spent £6,000 kitting out and furnishing each flat, which he hopes to let for £350 a month. After deducting bills of £500, mortgage repayments of £1,200 and agency fees, he believes he will be left with an annual profit of £1,700 on the two flats he hopes to let; he is keeping the first for his own use.

Including capital growth of 10 per cent a year, Darren estimates that he will see a 35 per cent a year return on his investment, but he admits that there is some risk: his figures depend on letting the flats for at least 11 months of the year and his main rental market will be foreign workers or Estonians working for foreign companies. Agents suggest that this is achievable. He says:

"I've been through ten years of property growth in the UK and I see exactly the same thing happening in Estonia. When I bought my first buy-to-let in the UK, friends said, 'You're mad, what if you can't rent it out?' But if you want to be successful, you've got to take risks."

To read Darren's book go to TallinnProperty.com

To read the full article click here



Gang of four: from left, Gary Goodson, Darren Goodson, Mack Patel and Mario Onoufriou have all invested in property in Tallinn (RICHARD CANNON) 


Comments: TALLINN TIPS

DARREN GOODSON is not a man to miss an opportunity: he has set up a company advising UK investors in Tallinn and has written a book on buying there that he hopes to publish. Here are his top tips:

Research properties on the web before even booking your plane ticket. Contact estate agents and book viewing appointments before leaving. Once in Tallinn, use taxis, which are cheap.

Tap in to the estate agents' network to find plumbers, electricians and locksmiths and get builders/kitchen fitters lined up about two months in advance. All flats are sold as shells (common throughout Eastern Europe) but do not wait until completion to look for installers.

Get an English-speaking lawyer (try www.sorainen.ee or www.hedman.ee), and use professional translators: as well as translating documents they can also attend meetings with you.

Make sure that you get advice on which taxes you will be liable to pay.

Check all transactions with care. In Estonia the client, not the solicitor, organises the transfer of monies to the seller and the payment of the notary.

Get every quote in writing. It is quite common for extra prices to appear on the final invoice. Check that prices include delivery and installation.


TallinnProperty.com

Eastern Europe offers Cheap Stocks and Fast Growth

Eastern European markets look unstoppable, says FAZ.net. The Czech and Polish benchmark indices have gained about 35% and 26% respectively this year. And fund manager Odeniyaz Japarov - whose Nestor Osteuropa fund is the second-best German eastern European fund over the past three years with a gain of 126% - believes the region should have little trouble outperforming its Western counterparts over the next two years.

Reforms in the new EU entrants' economies to bring them into line with the EU have underpinned rapid growth, and the convergence process is set to continue, spurring further growth and stockmarket gains. The best bet is Poland, where GDP growth - set to outstrip most of its neighbours' growth this year - is giving profits a 'significant lift'. The Polish market offers 'a broad range' of attractive stocks, including Telekom Polska and Bank Pekao. Andreas Schiller of the Raiffeisen Zentralbank is also a Poland fan, citing the comparatively cheap p/e of 12.5 and the impending privatisation of a state-owned bank as further positive signs.

Japarov's favourite market is Russia, which looks 'very attractive', with rocketing GDP growth fuelled by high energy prices and domestic consumption. He is sanguine about property rights: 'If you believe, as I do, that the government is unlikely to attack another company as it did Yukos… then the market is too good to ignore.' Especially on a p/e of 7.6, says Austria Boersenbrief - which is cheap, even allowing for the risk to property rights. Also encouraging for Russia bulls are foreign investments in oil and gas firms - ConocoPhillips and Total are linking up with Lukoil and Novatek - and eased restrictions on foreign purchases of Gazprom shares. Beyond the oil and gas sector, mobile stocks MTS and Vimplecom are worth a look.

Published 01 October 2004 in MoneyWeek Magazine

New Flight Routes Planned to Croatia

Mar 19, 2005

EasyJet is in talks with Pula Airport in Istria to start daily flights from the UK. A decision is expected by the end of 2005.

GB Airways, the BA budget franchise partner, has announced daily flights from Manchester to Dubrovnik starting in May 2005.

British Airways has also announced that the number of flights from Gatwick to Dubrovnik will increase from 3 to 5. British Airways is also introducing 3 direct flights per week from Gatwick to Split.

Croatia Airlines will fly once a week from Heathrow and Manchetser to Split and from Gatwick and Manchester to Pula (Istria).

© Copyright 2005 Sunshine Estates

Hungary’s Parliament Rejects Move To Revive Capital Gains Tax

by Ulrika Lomas, Tax-News.com, Brussels
04 November 2004

The Hungarian parliament on Tuesday approved a motion tabled by a junior partner in the governmental coalition that will prevent the reintroduction of a capital gains tax.

In a bid to reconnect with its core working class vote, the ruling Socialist Party had announced earlier in the year that consideration was being given to the reintroduction of the 25% capital gains tax, abolished in 2003.

However, the proposal was widely condemned by the investment community, the Budapest Stock Exchange and the government’s coalition partner, the Free Democrats which submitted the motion.

Commenting on the parliamentary vote, Finance Ministry spokesman Ferenc Pichler stated: "This means there will not be a capital gains tax."

Pichler added that the impact on the government’s 2005 budget will be minimal as the tax would have added relatively little to its revenue intake.

InvestSlovakia helping British and Irish buy into Eastern European Proeprty Markets

With many analysts and investors believing that the property market in Ireland and the UK has reached a plateau, interest has grown in Eastern Europe and we believe that these markets offer excellent investment property and real estate opportunities over the medium/long term. We provide many investment options to our Irish and Uk investors - residential, including new developments and quality second hand apartments in centrally located areas as well as a range of commercial assets.

In partnership with our overseas teams we offer local financing possibilities, tax planning service and legal support for the prospective property investor.

Our activity includes a BTL (Buy to let) activity followed by management of the property and offers the investor ways to finance his investment locally and plan his tax duties in an intelligent manner. We at all times endeavour to match investment options to our client's exact requirements - thereby providing the best possible service to our clients.

Our company has a strong customer service ethos and we are committed to providing a personalised and professional service to our clients and in doing so are setting new standards in the property investment market.

Budapest, also known as "Queen of the Danube" is an enchanting city. At first glimpse it leaves an abiding impression with its old style grandeur, unique cultural heritage and mix of architectural styles. Peaceful and yet vibrant, the city treasures the old while embracing the new. Budapest is a mass of contrasts and contradictions which bring the city alive and gives it a somewhat magnetic quality. It is nothing short of breathtaking. It should come as no surprise to learn that Budapest has been designated by UNESCO as a world heritage site.

Bratislava is situated in the centre of Europe in the southwestern part of Slovakia. The capital city spreads like a fan on both banks of the River Danube. Central to it's appeal as an real estate investor's paradise is location - Vienna and Bratislava are the two closest capital cities in the world, only a short 64 km or 40 miles apart.

"The Slovak Republic is set to become the world's next Hong Kong or Ireland, that is, a small place that's an economic powerhouse."

The above quote from Steve Forbes, editor-in-chief of Forbes Magazine, concurs with a now widely held opinion - that Slovakia, and in particular it's capital Bratislava, is becoming an "investors' paradise".

For more details visit Investslovakia.com