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| Where is
the Sophisticated Property Investor Putting his Money? |
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| The Traditional
Favourites |
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| 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. |
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| Emerging
Markets |
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| 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. |
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| 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. |
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| It’s Just
Economics! |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| Going Forward in 2005 |
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| 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. |
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| 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. |
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| 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 urrently
way undervalued. |
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| 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 Eastern Europe and 2005 is a great time to arrive at the party! |
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| Bruce Stronge
is one of the founding partners of Slovak Investments, a company offering
investors the complete real estate solution including research, investment
property deals, property advice, tax consultancy, legal and mortgage contacts
through to after sales care and property management. |
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| Slovak Investments
was set up in order to fulfil the needs of a large number of property investors
who might not have the time, experience or contacts to profit from the
current EU and in particular the Slovakian real estate boom. See our website
for more information Slovak
Investments - where you can subscribe to our free Slovak
property newsletter and receive alerts when new property deals are about
to be released. |
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