Slovakia Investment Property

If you find this useful, please forward it to a friend...

=========================================================
Slovakia Investment Property Newsletter
February 2006 - Issue # 17
=========================================================

Welcome to our February Newsletter.

Ever since our periodic Slovakia newsletters were introduced
back in 2004, we have been receiving valuable feedback
from readers. One particular question seems to be springing
up month after month... Why are we mostly focusing on
Bratislava when there are other Slovak markets offering
interesting property opportunities too?

To address this query, our February issue looks at several
areas of Slovakia of interest to property buyers and
investors, including a brief assessment of their maturity
and potential.

And don't forget... if you missed any of our newsletters,
they are available for you here:

www.slovakiainvestmentproperty.com/newsletters.php

In this issue you will find:

1. Slovakia - 7th Best Money Maker?
2. Eight Regions, Many Opportunities
3. A Very Special Zilina Deal
4. Tell Us What You Think!

===================== FEATURE EDITORIAL =================

1) Slovakia - 7th Best Money Maker?

=========================================================

Channel 4's property show "A Place in the Sun" has named
Slovakia # 7 of the 20 Best Places to Make Money.

Although it's good news in terms of raising the country's
perception in the UK, I would give any of the program's
assessments more of an entertainment value than anything
else.

Frankly, anyone expecting to tripple or quadruple their
money in 10 years (no matter where in the world they buy)
must be a huge optimist (to put it nicely). You may well
double your money if you invest well (and are lucky),
but expecting continuous steep price growth for 10 years
is highly unrealistic. Or does anyone really believe a
standard apartment in Latvia, Slovakia, Romania etc will
be worth say GBP 300,000 by 2016?!

What's worse, CH4 does not seem to take into account any
risks present in some of the assessed countries (in
particular their # 1 Romania), although a market's immaturity
along with legal and ownership risks can make a huge impact
on any potential investment.

Now, provided you don't use CH4 in place of a proper market
research, it's still nice to see Slovakia rating well!

* * *

Last month the finance industry magazine, The Banker (part
of the Financial Times group) declared the governor of the
National Bank of Slovakia, Ivan Sramko, to be the Central
Banker of the year in Europe.

=========================================================

2) Eight Regions, Many Opportunities

=========================================================

Slovakia is divided into 8 self-administered regions, each
having its own capital: Bratislava, Trnava, Trencin, Nitra,
Zilina (western Slovakia), Banska Bystrica (central Slovakia),
Kosice and Presov (East).

A comprehensive town map can be seen here: www.mesto.sk

* TRNAVA & ZILINA *
(www.trnava.sk, www.zilina.sk)

Most of the wealth is concentrated in Bratislava followed
by other main western Slovak cities. These are also likely
to be of most interest to a property investor. The reasons
are simple - solid economy, growing investments (foreign
as well as domestic), excellent infrastructure, favourable
business environment.

This, along with relatively low unemployment and higher
prosperity of the population makes Trnava, Zilina, and to
a lesser extent Trencin and Nitra into exceptional markets
for those looking for untapped opportunities... including
low prices, low competition, and potentially high returns.

Trnava and Zilina are perhaps no longer a secret tip in
Slovakia, but are still virtually unknown abroad. Both
of these historic cities have lots in common:

- great infrastructure and accessibility (air, road, rail)
- fast growing economy
- rich history, culture (as well as being main university towns)

Trnava further benefits from the proximity to Bratislava,
while Zilina - Slovakia's 3rd largest city - is close to
the Czech and Polish borders, as well as located in a very
significant tourist region, with top ski resorts, thermal
spas, and historic monuments just a short drive away.

Most importantly, both Zilina and Trnava are getting a
massive economic boost set to transform the cities and
their population. They have received the largest foreign
investments Slovakia has ever seen -

In late 2005, PSA Peugeot Citroen completed their Trnava
car plant starting to produce 300,000 cars p.a. from 2006
(as well as announcing construction of a second smaller
plant by 2008)...

... while one of world's fastest growing car makers, Korean
giant Kia Hyundai, is building their first-ever European
production base - in Zilina - a huge 1.1 billion euro
investment. Production of 300,000 cars p.a. should start
in 2007.

Zilina and Trnava have a solid property market backed
by the relatively wealthy population, with high demand for
good quality property and new construction. However, and
importantly for a property investor, they now also offer
something most areas of Slovakia don't - a strong and
growing rental demand.

After all, 10,000+ new jobs are to be created in each city,
attracting thousands of workers from all over the country,
as well as foreign staff. The population of Zilina (ZA)
and Trnava (TT) is set to grow significantly in coming
years, further fuelling the local property markets.

Key facts for property investors in ZA & TT:

- demand for new & good resale properties many times
higher than supply
- solid capital growth expected on quality properties
- the only viable (albeit new) rental markets outside
Bratislava (not counting holiday lets in tourist areas)
- low prices compared to the capital
(new built flats in Trnava at GBP 650 - 720/m2 incl. VAT;
new apartments in Zilina at GBP 550 - 880/m2 incl. VAT)

* TRENCIN & NITRA *
(www.trencin.sk, www.nitra.sk)

While the residential market in Trencin and Nitra doesn't
currently offer much potential to an investor looking for
rental, these relatively wealthy towns will no doubt see
a growing property market in the coming 3+ years. With a
lack of a current rental market investors may want to
keep an eye on the two towns and any potential larger
investments they may receive in the future.

New developments are rare at the moment, with one or
two new apartment blocks in Nitra being sold at approx.
GBP 550/m2 incl. VAT.

The more adventurous commercial property investors may
find good opportunities in retail and mixed-use properties
in the town centres of Trencin an Nitra, offering low
prices and solid yields. While similar properties are
virtually impossible to get ahold of in the hot markets
of Trnava and Zilina, Nitra and Trencin are not yet on
the investment companies' radar.

* BANSKA BYSTRICA *
(www.banskabystrica.sk)

Banska Bystrica benefits, to certain extent, from its
proximity to popular ski resorts in the Low Tatras and
Velka Fatra mountains. However, it is not close enough
to offer a viable holiday let alternative, while long
term rental market is also virtually non-existent.

What's more, the city is in one of Slovakia's economically
weakest regions, with relatively high unemployment and
less than ideal infrastructure.

Although the ski resorts are starting to offer some
tourist letting opportunities, other areas of central
Slovakia (including Banska Bystrica) are unlikely to
attract property investors in the short-medium term.

Prices in BB are low, corresponding to the economic
situation; new properties can be had from around
GBP 400/m2 incl. VAT.

* KOSICE and PRESOV *
(www.kosice.sk, www.presov.sk)

The eastern parts of Slovakia belong to the least developed
and economically worst-off areas, with 20%-30% unemployment,
poor infrastructure and little investment. The respective
regional capitals of Kosice and Presov offer accordingly
limited opportunities in terms of property investment.

Kosice may attract some of the most adventurous buyers
focusing on the size of the country's second largest city.
While there are some pockets of relative wealth in Kosice
(compared to the rest of eastern Slovakia) it is in the
middle of a very poor region and we don't expect stable
returns on investment in this area at present.

New built properties in Kosice can be bought from approx.
GBP 450/m2 incl. VAT.

The Presov region is the most troubled part of the country,
with little hope for any serious improvement in the medium
term.

The general consensus is until there is a significant
infrastructure improvement in eastern Slovakia, major
investment will keep avoiding this part of the country.
The badly needed highway connection should be extended
to Kosice in approximately 10 years time. (Currently the
highway runs from Bratislava up to Zilina.)

* TOURIST AREAS *

For those looking for holiday lets as well as, potentially,
own use of a vacation home, Slovakia's top 5 ski resorts
provide a good alternative and growing rental potential.

The country's five star ski resorts are:

Jasna, Donovaly, Velka Raca - Oscadnica, Strbske Pleso,
and lately also Plejsy.

The ski resorts are in fact dual season, highly popular
in winter as well as summer. The visitor structure is
split between Slovaks and foreigners (most from surrounding
countries). Although property prices in the resorts are
often comparable to Bratislava, good property will likely
continue to see solid growth as a result of very limited
supply (severe building restrictions in what are mostly
National Park areas with high protection degree).

Some of the gateway towns for ski areas such as Poprad
may offer limited holiday let potential, but, if rental
income is important, buying closer to the slopes is a much
safer option. While visitors often stay in Poprad for a
day or night, the majority will not be willing to drive
for 30+ minutes each day to get to the nearest slopes.

Some of the (many) spa towns in Slovakia have good tourism
potential, however, visitors tend to stay in hotels to
have spa and medical treatments, accomodation and catering
all under one roof. Hotel capacities are more than sufficient
in all Slovak spas; accordingly, private letting is unlikely
to be profitable.

* OTHER LOCATIONS *

In general, other areas of Slovakia are unlikely to offer
much to a property investor for the foreseeable future.
For those looking for a cheap holiday home there are
plenty of picturesque locations and villages that may
just suit.

However, no price growth or rental potential can typically
be expected. A good example are homes in the many small
villages throughout all regions of the country. With
no economic perspective and leaving population property
prices are very low - houses can often be had from
GBP 10,000 (particularly in central & eastern Slovakia
and the poor areas of the south, close to Hungary border).
And, they are likely to stay at similar values for the
next many years.

Naturally, locations close to Bratislava benefit from
the proximity to the capital and its strong economy,
and accordingly property prices are higher.

While it is not possible to cover more areas in detail,
we welcome any questions you may have with respect to
this overview.

=========================================================

3) A Very Special Zilina Deal

=========================================================

As you may be aware of from our recent email alert, we
have a chance to secure 20 fantastic apartments in a new
development in the centre of Zilina.

We firmly believe this is the best property opportunity
ever available in Zilina, because:

* you can get a high quality new apartment in the city
centre - just 5 minutes walk from the absolute top
area, the historic pedestrian zone

* ... at some of the lowest prices for any new property
in Zilina today (including new flats currently built
on communist estates)

The development therefore offers extremely high capital
growth potential, particularly in the 3-5+ years term.

Importantly, Zilina has seen a very strong rental demand
and solid yields of 7-8% since 2005. This is expected to
continue as the car plant and logistical park will near
completion to start operations in 2007.

As with all of our investment opportunities, you will
benefit from a highly favourable payment structure (no
staged payments!). Mortgages are available subject to
status (max. 70% LTV).

The extreme (yet hardly surprising) popularity of this
development is witnessed by the fact the developers have
sold over half of the 64 units to local Slovak buyers
in just a month after release.

The only way for us to secure 20 of these excellent
apartments is to put down a proper reservation for
each of them, and allocate them to our clients within
a 30 day deadline.

Therefore, if you are interested in this deal, please
let us know asap. A full information pack will be
available early next week and send to all those who
registered interest in this opportunity.

Most apartments have two double bedrooms and a size of
approx. 110 m2. Parking is available either underground
or outside. The square metre prices are extremely
competitive at just GBP 580/m2 inclusive VAT!

All planning permits have been issued and construction
is starting in March, with completion scheduled for
May 2007.

If you are seriously interested in one of these apartments,
email us at contact@slovakiainvestmentproperty.com.
We need to be sure we can move the 20 units within the
deadline if we are to take on this wonderful opportunity.

It would be truly a shame to miss out on it!

=========================================================

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.

Best of success,

Petra Gajdosikova
Managing Director
Slovakia Investment Property
www.slovakiainvestmentproperty.com

Slovakia Investment Property is a trading name of
Alpha Real Estate Investments Limited