Slovakia - Property market overview
 

Key points to note:

  • Stable economy: Healthy economy, member of the EU, Euro is expected to be adopted in 2008/9.

  • Capital appreciation has been strong to date: Economists predict a 15-20% annual growth in the next 3-5 years.

  • Attractive rental yields: Rental yields higher than many other central European countries and in some areas as high as 20%.

  • Exceptional growth of tourism:  Tourist numbers grew by 28% in 2004

  • Influx of foreign investment : Company's such as volkswagon and peugeot have opened operations. Foreign investment is expected to total about 1.5bn (2.2bn euros) in 2005.

  • Strong economy in the major Cities: High demand for new built city flats from local population keen on the new high standards.

  • Good investment Climate: Rated as the top performer in improving it's investment climate in 2005 by the World bank. No restrictions on citizens from EU member states purchasing property as non-nationals.

  • Developing mortgage market: The mortgage market in Slovakia is rapidly developing, allowing more and more Slovaks to enter the residential market.

  • Shortage of supply: Slovakia, and Bratislava in particular, has a massive shortage of housing stock. At 309 per 1,000 inhabitants, the number of dwellings in Slovakia falls well below the EU average of 450 dwellings per 1,000).  A significant shortage of apartments is forecast for Bratislava.

     

     

    Summary comments:

    Slovakia is currently undergoing a rapid transformation. The country has gained accession to the EU, membership of OCED and Nato.   It has also been receiving favourable reports from highly reputable organizations which include the World bank’s “Doing Business 2005” which rated Slovakia as the worlds top performer in improving its investment climate over the past year. Rental yields in Bratislava are very attractive and in some areas are as high as 20%. There has been a influx of foreign investment including company’s such as Volkswagen and Peugeot. There is a significantly high demand for apartments in Bratislava.



    Detailed information - Slovakia

    It is our goal to develop a range of investment opportunities for people who are looking at buying investment property.  Please find below information that we think is useful property investment advice.  The information ranges from web links to interesting web sites, news articles and property reports that we have found.  We do not necessarily agree with all the comments made. 

     

    • Country Information:

     

    Map of Slovakia

     

    The rise of Slovakia and in particular it’s capital city, Bratislava, as an important centre of economic, political and cultural life has been an impressive transformation.  

    Key points to note about Slovakia:

              Official Language is Slovak (Hungarian and English also widely spoken)

              Time Zone - Central European Time: GMT +1 hour

              Slovakia has a continental climate with hot and humid summers and cold and dry winters.
    - Average Temp in Summer 19C to 31C
    - Average Temp in Winter -3C to 2C
    In areas of high altitude snow is often present for up to 130 days of the year.

              Population of Bratislava - 600,000 approx

              Population of Slovakia - 5.4 million approx

              Slovakia is located at the precise geographic centre of the new Europe and borders five other countries: Austria, Czech Republic, Hungary, Poland, and Ukraine.

              Slovakia became a sovereign state in 1993 following the collapse of communism and the dissolution of the Federal Republic of Czechoslovakia - following the "velvet revolution" which led to the creation of two seperate states - The Slovak Republic and The Czech Republic.

              With a population of around 5.4 million the main centres of population are: Bratislava (capital city - population circa 600,000), Kosice, Zilina, Presov and Banska Bystrica.

              Due to it's climate and high mountain ranges Slovakia offers many ski resorts and winter sports.

              The currency is the Slovak Koruna, the Euro is expected to be adopted in 2008/9.

              As a parliamentary democracy the head of state is the President.

              The main ethnic groups are: Slovak (85.8%), Hungarian (9.7%) and Czech (0.8%).

              Since its separation from the Czech Republic, Slovakia has been undergoing a transformation from a socialist to a free-market economy with privatisation now accounting for up to a third of the nation's enterprises and 85% of GDP.

              Slovakia joined NATO in March 2004 and was one of ten new countries to join the European Union (EU) on 1 May 2004.

     

     

    • Economic development

     Slovakia's high economic growth, forcast to be around 5.5% for 2005 , has fuelled a growth in living standard and a low unemployment rate in the Cities. 

    According to CSOB analyst Silvia Cechovicova, the high retail sales growth has already indicated a massive growth in household consumption, also supported by higher real wages and growing employment.

    Slovenska Sporitelna analyst Maria Feherova says that

    “ Slovakia's capital is gleaming with foreign investment. It has become the eastern European darling of the multinationals - and foreign investment is expected to total about 1.5bn (2.2bn euros) this year, twice the amount attracted in 2004. “

    According to the World Bank, Slovakia had the fastest transforming business environment in the world in 2004/5, and already comparisons are being drawn with Ireland's economic transformation in the 1990s.

    The biggest investments in Slovakia have been in car plants. Fifty km outside Bratislava, a vast car manufacturing plant for Peugeot-Citroen has sprung up in less than a year.

     

     

    • Property Market
       

     Demand For Property
    Property demand will vary across the regions of
    Slovakia and the types of housing on offer.  For example many experts believe that in Bratislava there will be demand for at least 45,000 apartments over the next five years, at a conservative estimate. It means, every year about 9,000 apartments would have to be built, which is physically almost impossible. Last year only about 900 apartments were completed.  However, demand for old communist blocks is low and likely to continue to weaken.

     

    Potential For Capital Appreciation
    Property prices in
    Bratislava have been rising steadily over the last few years. 2003 saw an average growth of 20% and prices are expected to continue climbing. Most economists predict a 15 - 20% annual growth in the next 3 - 5 years.

     

    The following will be the driving forces behind this expected growth:

    • Currently lower price per square metre comparable to it's Eastern European neighbours.
    • Demand for housing continues to soar amongst a backdrop of severe shortage in the market and in particular a shortage of new construction (where new residential/commercial construction in Slovakia is well below those in other EU countries. Slovakia, and Bratislava in particular, has a massive shortage of housing stock. At 309 per 1,000 inhabitants, the number of dwellings in Slovakia falls well below the EU average of 450 dwellings per 1,000).
    • Huge demand for new built flats from local population keen on the new high standard (most having lived in communist built concrete blocks of flats)
    • The mortgage market in Slovakia is rapidly developing, allowing more and more Slovaks to enter the residential market.
    • Increasing prosperity of Slovak population following EU accession.
    • A huge disparity between unemployment in the capital (circa 4%) and the rest of the country (circa 16%) leading to ever increasing migration to the capital
    • Increasing foreign investment
    • Bouyant export market.
    • No restrictions on citizens from EU member states purchasing property as non-nationals following reforms in 2004.

     

    Rental Yields

    Rental yields are higher than in many Central European countries, currently estimated at around 20%, and there remains a shortage of new build