| June '05 Newsletter |
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| Thursday, 30 June 2005 | |
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Welcome to our June '05 Newsletter. We hope that you are enjoying the new layout of the website and that the addition of the 'News/Press' section is useful to you. With real estate in Slovakia receiving increasing amounts of media attention in the last few months, we thought that this addition would provide interesting reading for you. Contents: 1) Slovakia: Latest Economic Data 2) Article: Where is the Sophisticated Property Investor Putting his Money? 3) Can We Help? ************************************************************ 1) Slovakia: Latest Economic Data************************************************************GDP looking good: GDP growth in the first quarter was 5.1% after a preliminary estimate of 5.0% and Quarter 4 growth of 5.8%. Household consumption was up by 5.5%, and investment by 5.8%. The headline figures are not a big surprise, and the composition is similar to previous quarters as well. It is expected that investment will remain strong as foreign direct investment comes in and later in the year exports should pick up. Inflation and Interest Rates: Consumer price inflation in Slovakia slowed to 2,4% year-on-year last month from 2,7%. This is the tenth consecutive fall and is lower than the central bank target for year end of 3-4%. This low level of CPI is fuelling speculation that interest rates are set to fall from the current 3% level. This drop could well occur in the coming months which of course is very good news for property investors. A fall in interest rates not only leads to capital growth in property prices, but higher net yields for landlords as borrowing costs fall. ************************************************************ 2) Article: Where is the Sophisticated Property Investor Putting his Money?************************************************************Over the last five to ten years, UK investors buying property abroad have generally stuck to the traditional favourites Spain, France and Italy. With prices a fraction of those in the UK and a guarantee of more sunshine, these markets offered plenty of scope for capital appreciation, rental return and holiday home use. However as prices have steadily risen in these countries, yields have hardened in response and an eventual over-supply particularly in parts of Spain has occurred. In today’s environment property investors are looking further East for yield and capital appreciation opportunities. A year ago ten more countries joined the EU, expanding not only the Union, but the hunting ground of the international property investor. Most investors have come to the conclusion that the market cycle here in the UK is at it’s peak, and the more sophisticated investor has already started moving his money into the new EU countries. Many astute investors started buying there a year or two before EU accession, particularly in more developed cities like Prague and Budapest where the real estate markets were relatively more mature. So prices in these cities had already increased by up to 25% in the year up to May 2004, however there is still a long way to go especially in the other capitals of this region Putting your money into an emerging market surely has to be profitable because by the very definition of ‘emerging’, you should assume growth, and therefore return. EU accession is a massive catalyst to the growth of an economy as the EU is committed to backing these countries in a bid to creating comparable economies to those of it’s current members. Government incentives, new political regimes and tax reforms are creating an ideal climate for foreign direct investment, higher employment and GDP growth, which all directly affect the property market. The relative attractiveness of the older EU capitals from a corporate location point of view is changing according to a DTZ report on the Emerging EU economies. The report concludes that Bratislava, Berlin, Prague and Budapest will be the main beneficiaries in this new economic geography mainly due to their location and catchment areas, the associated low costs especially labour, skills base and the economic growth prospects of these four cities. In less than a year since the ten countries joined the union this is already evident, particularly in Bratislava as Slovakia wins some of the biggest foreign investment contracts in the region. I think most would agree that for long term steady growth complemented by relatively few risks, investing in bricks and mortar at home in the UK cannot be beaten for a good solid pension plan. Over the last 10 years the more adventurous have strayed off the beaten path to Spain, Italy and France in search of holiday homes and to diversify their portfolio. There is now however a new and far more exciting playground for us property investors which is sponsored by the European Union, has the most diverse culture in the world, it’s experiencing unrivalled GDP growth and it’s property market is currently way undervalued. Not only has the UK property market levelled out, it looks to stay that way for the next couple of years and the traditional overseas investment spots seem to have lost momentum and have been overshadowed by something bigger. The pioneers have cleared the stones from the road to Central & Eastern Europe and 2005 is a great time to arrive at the party! ************************************************************ 3) Can We Help?************************************************************Whilst we are in the process of negotiating our next deal for you, you might as well make further use of us by getting some of your questions answered. We can answer your Slovakian property questions regarding tax, legal issues, obtaining a mortgage in Slovakia as a foreigner, costs involved in buying property etc etc. We have very good relationships with local property solicitors, agreements with some of the largest mortgage lenders and an in-house Slovakian tax expert who will attempt to answer all your questions. Buying investment property abroad can be quite daunting, we don't want this to be the case when you invest in Slovakia with us: so just email us and ask! We attempt to keep our research pages up to date, so for all the latest news and research a property investor in Central Europe could want, please keep visiting http://www.slovakinvestments.com/research.html ************************************************************ We eagerly await details of some fantastic off plan investment units we have been trying to secure for our investors and will get details out to you as soon as we can. In the mean time, email us at info (at) slovakinvestments (dot) com to let us know what you are looking for and we'll see if we can help. All the best, Slovak Investments www.slovakinvestments.com |
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