Author Leaonne Hall is an expert on the overseas property market and has written extensively for a number of newsstand titles. She previously produced three editions of the Red Guide to Buying Property in Eastern Europe, and has been writing in detail on the individual markets since 2003.
Experiencing market growth similar to that of the Baltic States and described as being the next Hong Kong, Slovakia has been labelled an investment paradise.
Why buy in Slovakia?
Budget flights regularly fly into Bratislava, helping to stimulate the already healthy tourism market, while recent reforms of the political and social system and the introduction of a flat tax rate of 19% have transformed Slovakia into Europe’s tax haven. Set to adopt the euro in 2009 and with annual GDP growth of 6% – expected to rise to 7% in 2007 and beyond – Slovakia offers some excellent incentives to investors.
Following a period of stability in the market, supply is now outstripping demand quite significantly, especially in the capital Bratislava, and so prices are set to rise for the foreseeable future. Prosperity in the country is leading to a local desire to see the poor-quality housing replaced by new developments, there has been a growth in both construction and the mortgage market, and if the euro really is adopted in 2009 then this is going to lead to a boom in prices and investment.
Despite modernising and following a westernised economic model, Slovakia hasn’t been overcome by the negative attributes of western commercialism and remains very much an unspoilt country. For those seeking to buy in a place which offers beach resorts and bars, this isn’t it. Thanks to Slovakia’s many attractions and the numerous activities which can be enjoyed – such as skiing, caving, and walking – this really is a location for the more sophisticated buyer. What’s more, rental yields are currently between 8% to 10% meaning that you can look at generating a subsidiary income while watching your investment appreciate at a rapid rate.
Politics and economy
Slovakia is a parliamentary republic and has been since 1993 when the state of Czechoslovakia was dissolved. Part of NATO and an EU member since 2004, the country hopes to be using the euro by 2009. The current President is Ivan Gašparovič and the Prime Minister – who holds the most power – is Robert Fico.
Economically, Slovakia is in the process of transition, moving towards a more western-style economy which relies on services and away from the traditional industry-heavy economy. The former Prime Minister, Mikuláš Dzurinda, initiated a series of reforms that overhauled the labour, tax, pensions and healthcare systems and helped fast track Slovakia to the position as Europe’s fastest growing country economically. Annual GDP growth has been averaging 6% per annum since 2004, with 2007 expected to see this rise to 7%. Since 1999, foreign direct investment has quintupled and in 2004 the World Bank labelled Slovakia as having the fastest improving environment for investors. This is largely thanks to Slovakia’s flat tax system of 19%, which allowed the government to abandon stamp duty.
With affluence on the rise and wage growth outperforming that of the Baltics at 7%, the government managed to reduce the budget deficit from 7.2% to 3.6% in just two years. When compared to many of its Eastern European counterparts, Slovakia is clearly head and shoulders above the rest when it comes to economic dynamism and investment opportunities.
Geography and climate
Situated more in central than Eastern Europe, Slovakia is well located in terms of accessibility, lying in Europe’s heartland. Covering just over 49,000 square kilometres, the country borders Hungary, Austria, the Czech Republic, the Ukraine and Poland.
Around 40% of the country is forested, with most of central and northern Slovakia covered by the Carpathian Mountains, which are home to some stunning lakes, valleys and caves, and prime skiing territory. To the south is the capital, Bratislava, while to the east of the city are the Slovakian lowlands and the Danube basin.
With bitterly cold winters and hot, wet summers, spring sees an explosion of blooms and boasts sunny but chilly days, perfect for exploring the country. There is an average of 135 days of snow per year in the mountainous areas, while the lowlands enjoy a more temperate climate.
History and culture
Invaded by the Celts in 450BC, the Slovakian people have occupied their country since the 5th century. Slovakia has spent most of its history under Hungarian or Austro-Hungarian rule, a situation which prevailed from the 11th century until the collapse of the Austro-Hungarian Empire at the end of WWI. Following the end of the war, Czechoslovakia was formed, which was subjected to communist rule from the end of WWII until 1989. On 1st January 1993, the Czechs and Slovaks agreed to dissolve Czechoslovakia and go their separate ways as two independent states.
Boasting some stunning ecclesiastical history – centred around the towns of Trnava and Nitra – and peppered with a huge number of traditional wooden churches, Slovakia doesn’t seem to have been ravaged by its years under communism. Bratislava has seen its old town restored and while there is evidence of communist tower blocks, for the most part your interest is captured by the baroque architecture and broad, tree-lined boulevards. Dotted with picturesque medieval towns, the country is a haven for hikers and nature lovers. The Tatra National Park boasts some stunning walks, while the Tatras mountains are home to eagles, wolves, bears and otters, and there are plenty of skiing opportunities available. There are numerous opportunities for spelunking (cave exploration), a strong spa culture with over 1,000 springs dotted around the country, and sightseers will have their hands full trying to get round the 200 castles and fortifications the country boasts.
Slovakia enjoys a mix of nationalities, with the largest group – around 10% – being Hungarian. You will find that many road signs are written in Magyar as well as Slovakian. There is also a large Roma population, which makes up around 1.7% of the total population.
A religiously tolerant country, the largest group are the Roman Catholics, accounting for almost 70% of the population. The second largest denomination are Protestant (9%), with 13% following no religion.
Tourism and getting there
The tourist industry is rapidly growing in Slovakia, with over 30 million people visiting the country in 2006. Visitors weren’t allowed to enter the country during the communist era, but since the 90s, Slovakia has been receiving more than 500,000 tourists each year. Thanks to the spas, skiing, caving, culture and beautiful landscape, the country is destined to continue attracting visitors, especially as the affluence and economy continue to develop.
Cost of living
Slovakia is still an affordable country to live in and visit, although imported goods can be costly. A meal out can cost around £7 per person – obviously being more expensive in Bratislava – while the average weekly shopping bill is around £20. Even though Bratislava sits above Prague in the Mercer Cost of Living Survey, outside of the capital costs are much lower – whereas a meal may cost SKK1,000 (£20) in Bratislava, you are looking at closer to SKK650 (£14) elsewhere.
Food and drink
Given the ties between the two countries, there are many similarities between Slovak and Czech cuisine. However, Slovakian recipes have a hint of Hungarian spice, thanks to the many years under Magyar rule; goulash is a popular dish here.
Thanks to the cold climes that Slovaks have to endure, meals are loaded with carbohydrates, with lots of thick soups and potatoes. The heartiest meal of the day is dinner, which usually consists of warming soups and a meat-laden main course. Typical fare includes kapustnica (a hearty, sour cabbage soup with smoked pork sausage), while potato gnocchi with sheep’s cheese and bacon is the national dish.
The main wine-producing region is situated down towards the Hungarian border, although Slovakia isn’t renowned for its varieties. Beer is the main drink here, with domestic brands such as Golden Pheasant, Topvar and Corgon the favoured tipple. Other beverages include juniper brandy (borovicka) and slivovica, a plum brandy.