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| How to invest in Eastern Europe |
While the rest of the western world wonders whether domestic real estate investment remains a sensible consideration now that yields and equity growth rates are tumbling and the fast moving property sector slows and even stagnates in certain countries around the world, there exists a part of the world where real estate sectors are booming and the long term prospects for profit and growth are substantial.
Eastern Europe – home to stunning scenery, beautiful coastlines, unexplored forests, a wealth of history and culture - and now also home to some of the most exciting emerging economies and real estate markets in the world.
Here’s a look at the top five emerging property markets in Eastern Europe
Bulgaria – Poised on the brink of EU accession, Bulgaria is witnessing a property market explosion. Property investors are buying in Bulgaria now because they realize that to wait until 2007 when Bulgaria gains full European Union membership will be to miss out on the largest predicted price gains that will occur when membership is in place.
Investors are being drawn to the beautiful Black Sea coastline - home to mile upon mile of untouched, unspoilt and undeveloped sandy beaches and a beautiful mild and temperate climate – and to the fantastic ski regions of the country’s interior.
When Bulgaria joins the European Union on January the 1st2007 it will begin benefiting financially from EU financial aid packages designed to further boost the country’s economy and improve its infrastructure. In the meantime many international businesses are establishing bases in the country and Bulgaria’s economy is vastly and quickly improving. All positive points for a property investor interested in the long term growth in the real estate sector in Bulgaria.
Croatia – Home to in excess of 6,000 km of untouched coastline Croatia is developing a strong tourist market and a successful real estate sector which is attracting second homers and retirees looking for an affordable and safe country in which to live.
Also positioned to gain full EU membership in 2007 Croatia already has a very successful transitional economy which has attracted strong levels of vertical foreign direct investment as it aligns itself for membership of the European Union. Opportunities for the real estate investor exist countrywide and property prices are currently unbelievably low.
Estonia – Estonia is one of the most successful of the Eastern European economies as it has adopted and embraced a modern market economy whilst keeping corporate and personal taxation levels very low. These facts have resulted in the attraction and retention a lot of international business which has created local employment and led to local Estonians gaining in real wealth and in them slowly being able to afford to buy homes of their own.
A property investor should seek to target the local market and many who have already entered the market have enjoyed up to 30% annual gains in some areas.
Hungary – Hungary joined the EU in 2004 and is already benefiting from European Union financial aid whilst its government are committed to long term fiscal development meaning that the medium to long term prospects for all areas of Hungary’s economy are excellent.
The country has a growing wealthy middle class who are now able to buy their own homes as wages increase and the cost of borrowing remains low. Property investors could therefore target local buyers – alternatively they could focus on the tourism rental sector or the second home sector as Hungary is the most popular Eastern European country for second homers and the country’s capital Budapest is incredibly popular with overseas visitors.
Latvia – Since joining the EU in 2004 Latvia’s fortunes have gone from strength to strength with the capital city of Riga developing internationally competitive sectors in financial services, retailing and telecommunications.
Locally wages are increasing, the country’s GDP is healthily improving and the whole country is becoming a centre for vertical foreign direct investment. Again, property investors in Latvia should seek to target the local market and can currently buy into the property sector cheaply and hold assets while wages and prices rise. |
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| Czech Republic - Brno |
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Imagine if you had bought property in Prague 8 years ago....
Brno property has been getting a lot of exposure lately. And for good reason. Attractive deals in Prague are getting harder to find. Attention is beginning to turn elsewhere.
Brno is the second largest city in the Czech Republic. Being the business capital of Moravia it boasts some big name companies such as IBM, Siemens, Minolta CR, Honeywell Controls and FEI.
At the end of March 2005, RyanAir began daily direct flights from London to Brno. Flights from Dublin to Brno are rumored to be next on the list of priorities.
In 2008 a major motorway is planned to be completed that will link central-northern Moravia with Poland making the area more attractive for Polish investors and traffic.
Currently, property prices are a third of what is available in Prague and there is a strong and growing rental demand for quality properties.
But let's see some numbers. What are flats currently going for in Brno and what could we expect for rental income?
Studio apartment (1 + 1). Seven minute walk to main town square. One minute walk to trams and biggest park in the downtown Brno area. Newly renovated apartment in a heritage building. Listed price 750 000 CZK. Est. Rent: 8000 to 9000 CZK
Two bedroom (3 + 1) flat on Merhautova St. Completely reconstructed. One minute walk to the trams. Balcony. 90 m2. Big storage space in the basement. Asking price 1 590 000 CZK. Est. Rent: 12000 to 13000 CZK
Three bedroom (4 + 1) flat in heritage building. Eight minute walk to downtown square. One minute walk to the trams. Window view of the biggest park in the downtown area. Newly renovated. Balcony off the master bedroom. Around 140 m2. Est. price 2 500 000 CZK. Est. Rent: 14000 to 15000 CZK
Please contact us at realestate@ swissdom.ch for more information. |
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| Czech Republic - Ostrava |
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Area: 214 km2
Population (latest data April, 2004): 315 000
Road Distance from important European and Czech cities:
City kms
Brno 170
Olomouc 93
Prague 360
Vienna 310
Bratislava 300
Warsaw 300
Budapest 389
Berlin 540
Paris 1 500
With the completion of the D-47 highway the infrastructure capacity will greatly increase as well as the ease of travel. Travel time to the Czech capital, Prague, will be shortened to a little over three hours.
Air Transportation:
Ostrava - Mosnov International Airport is located 25 km from the city centre. It is the biggest regional airport in the Czech Republic with a capacity of more than one million passengers per year (current actual figures are just over 200 000 per year and expected to triple next year) and a runway 3500m in length and 63m wide, allowing it to accommodate the world's largest airplanes. Currently it caters to both domestic and international flights.
Although there are currently not any well-known low cost carriers flying into Ostrava we expect it will only be a matter of time.
Average monthly salary for Ostrava region (2004): 18 966 CZK
Average monthly salary for Czech Republic (2004): 18 582 CZK
Average monthly salary for Czech Republic (2005 2nd Q): 18 763 CZK
Education: 16.3% of residents in Ostrava have University level education compared to 9.4% Czech wide.
Ostrava Property Figures
Apartment and Flat Rentals in CZK per month (2005 1st Q):
(average range - exceptions can be found either way)
Size CZK/month
1 + 1 (studio or bachelor) 4 000 - 5 500
2 + 1 (1 bedroom) 5 000 - 7 000
3 + 1 (2 bedroom) 7 000 - 9 000
4 + 1 (3 bedroom) 8 000 - 11 000
House Sales in thousands of CZK per flat (2005 1st Q):
(average range - exceptions can be found either way)
Size New Build (ave. 17 000 CZK/m2) Heritage Building
1 + 1 (studio or bachelor) 650 - 950 350 - 700
2 + 1 (1 bedroom) 800 - 1 200 500 - 800
3 + 1 (2 bedroom) 1 300 - 2 500 700 - 1 200
4 + 1 (3 bedroom) 1 800 - 3 000 1 200 - 2 100
Property Examples
(common closing prices are commonly 5 - 10% less than the asking price)
Studio (1 + 1) flat right in the center of Ostrava. 37 m2. Completely reconstructed. Floor 5 of 5 with an elevator. Asking price: 395 000 CZK
2 bedroom (3 + 1) completely reconstructed. Floor 1/3. 76 m2. The price includes a garage. Asking price: 1 260 000 CZK |
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| SWISSDOM S.A. - Route de Florissant 1 - CH-1206 Geneva - FAX +41 22 346 6956 |
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