THE PROPERTY MARKET

Ever since EU accession, Slovakia’s property market has been developing at a staggering rate, yet still playing catch-up with markets such as Hungary and the Czech Republic. Unlike countries such as Bulgaria, Slovakia has been steadily attaining moderate levels of capital growth over the past few years without constantly being in the headlines, and has managed to develop without importing the burger bar aspect of Westernism into this staggeringly beautiful country. Between 2003 and 2004, prices were reported to have increased by 50% in some areas and thanks to political and economic stability, coupled with EU memberships and planned euro adoption, the market is tipped to go from strength to strength, making it an ideal investment climate. A Place in the Sun magazine ranked Slovakia as seventh in the world for potential market growth, estimating a 307% return on investments in the next 10 years.

With demand from the local population growing and a maturing of the mortgage market, Slovakia is not totally reliant on foreign investment to sustain its immature property market. With more and more Slovaks joining the burgeoning middle class ranks, and as mortgages get cheaper, the Slovakian tendency to buy rather than rent is predicted to put a squeeze on a market which is already short of properties. Slovakia currently has the lowest construction rate in Europe, with a 50,000 house deficit per annum, which is good news for those thinking of buying into an appreciating market.

The market is predominantly focused on Bratislava, something that is set to change as the country is opened up to increasing tourist numbers and as Bratislava prices begin to reach a level with other European capitals. At present there is a shortage of good-quality property in Bratislava, which is helping to sustain the price hikes and as with many emerging markets, prices are much higher in the capital – £200,000 for an apartment – than elsewhere in the country, where you can purchase a villa for £30,000.

Where to buy

Bratislava

When looking at where to buy, Bratislava is still the magnet for overseas buyers. Set to undergo a face lift, the Slovakian government are ensuring that Bratislava is going to be the place to be over the next few years. Regarded as a massively undervalued market, prices in the capital have increased rapidly over the last few years, with 2005 experiencing inflation of 10 – 15% and 2004 witnessing growth of 25%. These rises seem set to continue for the foreseeable future. While price hikes tapered off after initial rises, they have begun to rocket again as there continues to be a shortage of high-quality homes, and demand from the local market rises.

Bratislava’s proximity to Vienna, Prague and Budapest is a major selling point for investors, as is the proximity of two airports within 45 minutes of the capital. Given that Vienna is double the price of Bratislava and a new motorway due to be completed in 2007 will connect the two, demand from Austrian citizens is again set to push prices higher. A good jet-to-let prospect, yields currently sit at around 8 – 10%.

With 17 residential districts, there is plenty of choice – perhaps too much. Foreigners aspire to purchase in the old town, but if you are looking to buy to let, the downtown area is the prime location for expat workers.

Tatras Mountains

Popular for many years with foreign and local tourists, the country’s ski resorts enjoy excellent snow conditions, modern runs and facilities and natural attractions, such as caves, waterfalls, castles and thermal springs. Consequently, they are increasingly acquiring the status of property hotspots, attracting investors as well as second-home buyers. Agents believe that Slovakian ski resorts – and other major tourist centres – will see an increase in interest during 2007 and 2008. Though little is known about them by investors, in some instances they can often offer higher returns than Bratislava. Prices are being fuelled by the interest from wealthy Slovaks, who are willing to pay high prices for a weekend retreat in resorts of the High and Low Tatras, Velka and Mala Fatra. Nevertheless, you can still pick up a three-bedroomed house for £80,000.

Many new developments are planned for the Slovakian ski resorts, fuelled by the millions of euros that have been invested on new ski gondolas, slopes and lifts. If you are thinking of buying to rent here then ensure you buy close to an established resort such as Štrbské Pleso and Smokovce. Liptov and Poprad are also good bets, especially as Poprad has an international airport which is served by Sky Europe from London Stansted, with rumours that Ryanair may soon be flying there too.

Žilina and Trnava

Newly established in terms of interest from foreign investors, the cities of Žilina and Trnava have made it on to the investment radar in 2005 – 6 due to their recently-built manufacturing plants.

Žilina is Slovakia’s third largest city, located in north-western Slovakia, 200km from the capital, Bratislava. An important industrial centre, Žilina is on the confluence of the Váh, Kysuca and Rajčanka rivers and it’s surrounded by mountains. Trnava is a much smaller university town, located close to the capital, being only 45km to the northeast of Bratislava. A medieval town surrounded by ancient city walls, Trnava has a rich ecclesiastical heritage and because of the high number of churches within the town walls, it has often been referred to as ‘Little Rome’, or ‘Slovak Rome’.

Both of these markets are very small, with property prices dependant on the location, style, age and type of property. Prices are an average of 30 – 50% cheaper than Bratislava, with communist built flats in Žilina and Trnava priced for as little as £15,000, with studio or one-bedroomed apartments selling for £30,000. The average price for a newly-built one- to two-bedroomed apartment sits at between £35,000 – £70,000, with luxury flats in the centre going for £150,000 – however, these are hard to find. You can find houses for as little as £40,000 in the suburbs, but these are generally in very poor condition. Larger, newer houses can cost more than £400,000.

What to buy

Similar to Prague, Bratislava’s market is dominated by newly-built properties and developments, although older properties are selling at a premium – just be sure that if you do look to buy a historic property that you check the title thoroughly. As a popular tourist and second-home location, there are a number of cottages or rural villas which can attract rental income and good rates of appreciation, especially in the Tatras Mountains. Generally speaking, you should steer clear of old communist-style housing, unless you are happy to live or stay there yourself. Giving the growing wealth of the locals, there are stronger resale and rental markets for newly-built modern apartments.