Just a few days are left before we welcome the New Year.
It is therefore appropriate to look back and see what
2005 brought to Slovakia, and what can be expected in 2006.
We at Slovakia Investment Property would like to thank
all of you for your trust and support, and look forward
to providing you an even better service next year.
In this issue you will find:
1. 2005, a Good Year for Slovakia
2. Slovakia in 2006: Economy and Real Estate Preview
3. Launching in January - Top Ski Homes with Rent Guarantee!
4. Tell Us What You Think!
===================== FEATURE EDITORIAL =================
1) 2005, a Good Year for Slovakia
=========================================================
As any year before, 2005 has brought good as well as sad
news to the world. For Slovakia, however, the balance is
a very positive one.
ECONOMY
-------
The country's economic boom has exceeded all expectations,
with 2005 growth well above the already strong 2003 and 2004
figures.
The Slovak economy has expanded by 6.2% y/o/y in 3Q, which
should bring this year's GDP growth to approx. 5.6% -
the fastest since 1998 and, as in previous years, highest
in Central Europe.
* * *
Last month Slovakia joined ERM II (EU's exchange rate mechanism;
a 2 year stay in ERM II is condition for euro adoption) ahead
of the expected June 2006 entry. This supports government's
plans to adopt euro in January 2009. Slovakia will be the
first country in Central Europe to join the single currency.
* * *
In acknowledgement of Slovakia's success, the world's main
rating agencies have been increasing the country's ratings
that are now the best in Central Europe. (Just a few days
ago S&P's raised Slovakia's Long Term rating from A- to A.)
* * *
Strong economic growth and the foreign direct investment boom
are starting to bear fruits: real wages are rising at 7% p.a.,
employment is growing, and household consumption and retail
sales are soaring on the back of higher disposable incomes.
Living standards in Bratislava, Slovakia's wealthiest region,
have exceeded the EU 15 average. The city's per capita GDP
stands at 110% of the EU 15's GDP (per cap.).
TRAVEL & TOURISM
----------------
2005 was a good year for Slovakia's travel & tourism industry,
with revenues rising by 40% y/o/y.
Bratislava, the most popular short-term destination, has
seen a large increase in business travel as well as weekend
breaks. The High and Low Tatra mountains with their amazing
landscape and wealth of sporting and relaxation opportunities
were (along with the beautiful Liptov region) the most
visited long-term holiday destination in 2005.
Bratislava airport has been experiencing an extraordinary
growth in passenger numbers both in 2004 and 2005, in part
thanks to the many low budget flights from all main European
cities (including London and Dublin).
The city of Poprad, gateway to the Tatra mountains, has,
a few weeks ago, received the first visitors brought by
the newly introduced Sky Europe flights from London.
PROPERTY
--------
The Slovak property market is currently experiencing a boom,
with strong demand for better housing and accessible mortgage
finance at low rates. This, along with the short supply of
quality properties and (still) low construction rates continues
to drive prices up (with the exception of communist built flats).
A positive fact for buyers and sellers was the January 2005
transfer tax abolition. Slovakia is one of the few markets
in the world where no transfer tax or stamp duty is payable
on real estate transactions.
The commercial property sector has seen high development
activity in 2005 - from massive logistic parks in Trnava
and along the main highway, to large shopping centres such
as Bratislava's Shopping Palace, and several new business
centres (Apollo being the largest, in BA II).
* * *
In 2005 Slovakia has seen the highest growth in mortgage
finance among all EU countries. Each year since 2002 the
number of mortgages taken out in Slovakia has been increasing
by around 50%.
However, the country still has the second-lowest volume of
mortgages (as % of GDP) in the EU and a very long way to
catch up.
Total indebtedness of Slovak households is low as well -
short, medium and long term credits stand at less than 20%
of annual incomes.
=========================================================
2) Slovakia in 2006: Economy and Real Estate Preview
=========================================================
The new year should bring more good news not only for
Slovakia, but also those with business and investment
interests in the country.
ECONOMIC BOOM
-------------
Slovakia's Ministry of Finance as well as international
institutions predict an even stronger GDP growth for 2006
- expectations range from 6 to 6.8%. Inflation (currently
at 3.4%) should continue on its way down. Private consumption
will play an increasingly strong role as a driver of economic
growth, along with exports.
INVESTMENTS
-----------
As in the last few years, the country will keep attracting
significant foreign investments in 2006. One of the most
important is the science and research park CEPIT, to be
built on the outskirts of Bratislava.
Slovakia, from 2006/7 the world's largest car manufacturer
(per capita), will benefit from yet another motor investment
- PSA Peugeot Citroen has announced construction of a second
plant in the town of Trnava, to produce an additional 150,000
cars a year. (PSA's recently completed Trnava plant will
produce 300,000 vehicles.)
While Kia Hyundai's factory in the northern town of Zilina
will only start operating in late 2006, Bratislava's Volkswagen
plant (established since 1993) is launching production of
its newest luxury Audi Q7, to join other high-end models
made in Bratislava (Porsche Cayenne and VW Touareg).
* * *
Although most state-owned companies have been privatized
over the last 15 years, a few large deals are left for 2006
- most importantly, conclusion of SE (Slovenske elektrarne,
energy supplier) sale to Italy's Enel and the privatisation
of Bratislava and Kosice airports.
The preliminary winner of the airport privatisation, TwoOne
consortium (comprised of Flughafen Wien - Vienna airport,
Zentralbank, and Slovak investment group Penta) still needs
to be approved by the Slovak government.
TOURISM GROWTH
--------------
With Slovakia's growing popularity as a holiday destination,
and massive investments going into improvement of the main
tourist regions - in particular the country's top ski resorts
in the Low and High Tatras - 2006 is expected to bring a
significant increase in visitor numbers and revenues.
The Slovak government, recognizing tourism as one of the
country's priorities, has identified several zones of
importance (with the Tatra mountains in prime position).
These regions, including Bratislava, will also see further
investments into new hotels (several planned for Bratislava)
and upgrading of existing accomodation and service facilities
(mountain resorts). The just introduced direct flights (Sky
Europe) from London to Poprad will give the Tatra region
another significant boost in 2006.
The capital itself should also benefit from a planned
catamaran transport along the Danube to Vienna. While
currently only a few older cruise ships are in service,
the new catamarans should provide a fast, frequent, and
reliable transport option for both visitors and commuters.
PROPERTY MARKET
---------------
Investment in residential and commercial property in Slovakia
will continue proving profitable in 2006. Bratislava will
again be the country's highest activity market.
However, the residential market will see increasing segmentation
- communist built apartments will, depending on location,
either hold their value or see a further drop; new properties
in more sought-after areas should keep experiencing a price
growth of 10-20% (based on location and quality), with new
apartments in areas of lesser demand (eg. outskirts of
Bratislava) most likely increasing by under 5%.
The undersupplied luxury sector in Bratislava will welcome
the construction start of a few top end, elite developments
(to be built by 2008/9).
Investments in popular tourist regions will also become
increasingly popular in 2006 and beyond, backed by Slovakia's
growing visitor numbers and tourism activity.
Already of interest to commercial property investors, the
country's regional capitals will be catching eye of early
residential investors (apart from already booming Trnava and
Zilina, the other western Slovak cities of Trencin and Nitra,
and to a lesser extent Banska Bystrica and Kosice, with very
little potential in Presov).
In terms of commercial property developments, major shopping
and entertainment complexes are planned for construction in
the above mentioned cities (except Presov), as well as the
first large business centre outside Bratislava - in Banska
Bystrica.
Bratislava, considered saturated in terms of shopping centres,
will see the probably last large shopping mall - Yosaria
Plaza - created by reconstruction and enlargement of an
older facility. The city will also welcome a few new business
centres to be raised in BA I, BA II and BA V (Park One, CBC,
Tower 115, Apollo II, Digital Park).
Logistic parks will keep springing up in 2006, mainly along
the D1 and D2 highways (direction to Zilina and to Brno).
MORTGAGES
---------
In recent years interest rates have been falling sharply in
Slovakia and have, in fact, reached their lowest level (at
3% base rate). Consequently mortgages have become cheap in
2005, with rates of 4 - 6% p.a.
Based on the country's extremely fast economic growth (and
therefore inflation risks) as well as ECB's euro rate hike,
National Bank of Slovakia (NBS) is expected to raise the
base rate by 50bp to 3.5% early next year.
Mortgages, however, have already become more expensive in
late 2005. The reason was a significant increase (September)
in market interest rates on which banks base their own rates,
by approx. 1%.
With expected base rate hike(s) in 2006 mortgages will become
moderately more expensive, with rates likely to start around
or just under 5% p.a.
=========================================================
3) Launching in January - Top Ski Homes with Rent Guarantee!
=========================================================
Slovakia, with its majestic mountain ranges and excellent
ski conditions welcomes, year after year, skiers and holiday
makers from all over Europe.
As every year, the 2005 ski season opened between late
November and mid December (depending on resort), with all
slopes boasting outstanding snow conditions. With the season
ending in late March to mid April, ski and winter sport
enthusiasts can look forward to an exciting few months!
(Provided, of course, they booked their rooms far ahead, as
especially in the year-end and New Year period accomodation
facilities are hopelessly full.)
Appropriately for the white winter, we are bringing you a
very special deal ... from 9th January you will have a
chance to become the owner of your very own ski home, built
in traditional Liptov-architecture (wood & stone) and nestled
in the majestic mountains of the Low Tatras.
Within minutes from two of Slovakia's best and most visited
ski resorts, and easily accessible by air, rail, bus or car,
these wonderful, high quality mountain chalets are perfect
for all those looking for a beautiful vacation home in one
of Europe's last unspoiled mountain paradises.
With dual season, magnificient nature (including waterfalls,
caves, crystal mountain lakes and wild rivers) and a wealth
of activities on your doorstep, you will be spoilt for choice.
Skiing and cross-country, snowboarding, snowtubing, hiking,
rafting, paragliding, cycling, horse- and sled dog riding,
fishing, hunting...there is something for all tastes and ages.
Fancy a bit of culture, history, or relaxation? A fantastic
world of castles, chateaus, ancient towns and open-air folk
museums, as well as thermal spas for relaxation and healing
awaits you!
But, what if you're not a mountain type? No problem! If you
don't want to use your home for more than 3 weeks a year,
why not take advantage of the fantastic rent guarantee we
have arranged for you?
You have the option to receive an amazing 5% NET rental yield
(equivalent to 8-9% gr.) from a specialist travel agency
(not linked to the developer)!
And the best news at last!
You can now benefit from a unique EARLY-BIRD opportunity:
we have secured the first 30 homes at rock-bottom entry prices.
All further properties (as well as any homes purchased after
28 February) will be offered at 20% higher prices!
So, how much will you pay for your spacious, beautiful, new
ski chalet? Less than for an apartment in Bulgaria and a tiny
fraction of a ski home in the Alps...
Two bedroom chalets over two floors (80 m2) start at an
amazing £50,000 - including land plots and VAT!
Whether you are looking for a lucrative investment or a
wonderful, high quality holiday home in one of Europe's most
breathtaking locations, your new chalet in Slovakia's largest
mountain range will keep bringing you joy year after year.
If you had registered your interest, you should have
received a full information pack last week. Otherwise,
please contact us for more details (after 9 January).
Reservations will be open on 9th January.
And, don't forget - only 30 of these extraordinary homes
are available at the rock-bottom early-bird prices!
If you ever dreamed of a charming mountain home amidst
fascinating nature and rich cultural and historic heritage,
or a holiday investment in one of Europe's fastest growing
property markets ... Now is the time!
=========================================================
4) Tell Us What You Think!
=========================================================
We would love to hear what you think of this issue of our
newsletter. We hope you find the information useful and
wish you best success in your investment activities.
And of course, if you have any suggestions for upcoming
issues that you'd like to share with us, please send them!
Just e-mail us at: contact@slovakiainvestmentproperty.com
=========================================================
We are looking forward to seeing you next month. In the
meantime, if you have any questions or would like to
request further information, please contact us at
info@slovakiainvestmentproperty.com or at
+44 (0)207 152 4014.
Wishing you a very happy and successful New Year,
Petra Gajdosikova
Managing Director
Slovakia Investment Property
www.slovakiainvestmentproperty.com
=========================================================
Copyright 2004-2005, Slovakia Investment Property
All rights reserved
Slovakia Investment Property is a trading name of
Alpha Real Estate Investments Limited