Slovakia Investment Property

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Slovakia Investment Property Newsletter
January 2005 - Issue # 4
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Dear

Firstly, may we take this opportunity to thank you for your
support, business and friendship in 2004 and wish you lots
of happiness in 2005. By popular demand, our Newsletter from
now on will be delivered monthly, rather than quarterly as
in 2004.

Welcome to our first 2005 issue, bringing you:

1. More Tax Savings in 2005
2. How To Avoid the Foreigner Trap
3. Can You Afford to Miss on This One?
4. Win a Bottle of 'Medovina'! (Prize Draw)
5. Tell Us What You Think!

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

1) More Tax Savings in 2005

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The Slovak republic has one of the best tax regimes in Europe.
With a 19% flat tax for both individuals and corporations,
no inheritance tax and no taxation of dividends, the country
has been the target of international praise and admiration
(as well as envy from the likes of France and Germany).

And now there is yet more great news - especially for the
property buyer. The Slovak transfer tax - equivalent to
stamp duty - which has already been reduced (from a
progressive 6-20%) to 3% in 2004, has now been completely
abolished, effective 1 January 2005.

Slovakia is now one of the few countries in the world where
no transfer tax is payable when selling (or gifting) real
estate. This will only further boost the already strong
domestic property market.

>From both a business and economic point of view, 2005 looks
very rosy for Slovakia, with economic growth over 5%, one
of the best business environments in Europe, and an ever
increasing amount of foreign direct investment money pouring
in.

For more tax information, as well as regular economic and
financial updates on Slovakia, please visit
www.slovakiainvestmentproperty.com.

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2) How To Avoid the Foreigner Trap

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Many of you will have taken advantage of some of the great
opportunities that presented themselves to the shrewd
investors in 2004. Eastern Europe with its enormous capital
growth potential has been the focus of many investors'
attention.

Although Central Eastern Europe offers some of the best
property investment prospects currently available, fortunes
not only can be made, but also lost here!

There are significant differences in the property markets,
purchasing habits, rules and legal systems between the
various CEE countries, and it's absolutely crucial to do
your research and seek proper advice from local experts
before deciding on any purchase.

There are many pitfalls waiting for the uninformed, some of
them mentioned in our previous newsletters. Here are some
other issues, more widespread than you might expect.

- LAND SCAMS

We hear it all the time...investors being offered a "bargain"
opportunity to buy land for development. Whether a small
vacation house or a large scale development, you will need
to obtain a planning permit - no matter which country.

This is not likely to happen if the land on offer is not
building land in the first place! While some of the emerging
markets in the south-east of the continent seem to have a
lead here, buyers all accross the region should beware of
vendors offering agricultural land while claiming construction
permits can be obtained.

If your bargain is too good to resist, make sure you make
the purchase subject to obtaining a planning permit, zoning
permit, or exclusion of the parcel(s) from the agricultural
fund (depending on country). Check whether your contract
gives you the right to rescind and get your money back if
a permit is not obtained.

- NEW DEVELOPMENTS

Buying a new built property abroad is not the same as buing
from a well-known UK developer. Don't assume than the
developer of your new flat or villa has obtained all
necessary planning permits! This is a costly mistake you
may come to regret. Unlawfully built property will not have
a legal title and will therefore be impossible to sell or
rent, and in many cases will have to be demolished.

Not less important is to ensure that you are buying from
a reputable developer. Since most developers in emerging
markets are unlikely to have a very long track record, a
bank guarantee should be obtained whenever possible.

In our last Bratislava opportunity, not only was the
developer a very reputable company, we also went the extra
mile to offer investors a full bank guarantee. This being
the first time ever a bank guarantee has been given on an
off-plan development in Slovakia, it had taken many weeks
to negotiate. However, we feel that anything providing
extra security to our investors is well worth the effort.

Given that the property markets in the region are less
mature than in Western Europe, guarantees will not always
be obtainable. This doesn't necessarily mean you should not
buy, but make sure you know about possible risks and are
comfortable with the situation.

While most countries' legal systems offer some protection
to consumers, you don't want to spend years in legal and
court battles! Especially not in Central Eastern Europe!

- LEGALS

Although in many countries it is not uncommon for locals to
buy or sell property without using the services of a solicitor,
for an investor not appointing a lawyer is saving money in
the wrong place!

Always make sure you use a local solicitor or a UK based
solicitor experienced and qualified in the respective
country's laws and legal process. Your regular British
solicitor is unlikely to be familiar with Slovak, Hungarian,
Bulgarian or Turkish law, therefore, of little help with
your overseas property purchase.

As our investors know, we highly recommend John Howell & Co
- the only UK solicitors company who for decades have been
doing nothing but international property conveyancing. You
can visit their website at www.europelaw.com.

- A TWO-TIER SCHEME

Most buyers will rely on estate agents or sourcing companies
to find their overseas property. Estate agents (who work
for the vendor) are typically paid by the seller - or/and
the buyer, depending on the country. Effectively, however,
it is the buyer paying the cost as vendors will calculate
it into the selling price. Sourcing companies (who work on
behalf of the buyer) will typically be paid by the buyer by
way of a finder's fee.

So far so good - provided you are aware of what you pay for
and all fees are clear upfront. Unfortunately it is very
common for buyers to face hidden fees and charges from the
agents who often - in agreement with the vendor or developer
- offer properties to foreign buyers at prices 20-40% higher
than those paid by locals.

The way to ensure you are not falling into the two-tier
trap is to have a native contact the developer or vendor
posing as interested buyer.

At Slovakia Investment Property we always guarantee your
purchase price is exactly the same as local buyers are
paying.

- IMPORTANT TIP

Whether you are buying a coastal property or city centre
apartment, a good way to ensure you are not overpaying
or falling into a foreigner trap is to see how many locals
have purchased a property in the immediate area.

Some locations becoming very popular with foreign investors
have priced locals out of the market. This may not seem a
problem while there are enough investors buying, but what
will happen with your resale market if the share of investors
drops signifficantly?

This is even more true with new developments - if a majority
of units have been purchased by local buyers, you know the
prices are fair for the domestic market. Beware of
developments where the share of domestic buyers is very
low or even non existent!

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3) Can You Afford to Miss on This One?

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As many of you will know, Slovakia is well on its way to
become a leading automotive power. By next year, the country
will be the number 1 car manufacturer in the world (per head)
- with over 1 million cars produced annually.

Billions of euro are pouring into Slovakia from some of the
world's leading car makers (vW, Peugeot Citroen, Kia Hyundai).
And now you have the unique opportunity to follow the big
guys and cash in on the amazing opportunities created by
these massive investments.

We are proud to announce our new development in the town of
Trnava - location of one of the biggest foreign investments
into Central Europe. Europe's car maker #2 PSA Peugeot Citroen
is building its new high-tech plant to start producing 300,000
cars a year from 2006. 10,000 new jobs will be created in
Trnava by Peugeot Citroen and its suppliers in 2005/6 alone.

Trnava (population 72,000), a mere 25 minutes from Bratislava,
boasts one of the best infrastructures in Slovakia, with great
air route access (international airports in Bratislava and
Piestany), good railway system and close proximity to Pan-
European highway network.

Trnava itself, being one of the oldest Slovak towns, has a
lot to offer. For its rich history, cultural heritage and
many famous churches it gained the nickname "Little Rome".
Just a short drive from Trnava there are some of western
Slovakia's best recreation and water sport spots and famous
castles. The world renowned healing spa of Piestany is just
a 15 minute drive away.

But why do we think Trnava is a property investor's paradise?

Well, most of its properties are owner occupied and the rare
rental flats get snapped up year by year by students - Trnava
is one of Slovakia's most famous university towns with three
universities and over 12,000 students. With massive shortage
of rental properties and hundreds of highly paid technicians,
engineers and managers moving to Trnava in 2005/6 (not to
count the thousands of manufacturing workers) this is every
buy-to-let investor's dream!

What's more, with a relatively wealthy population keen to
upgrade from their communist era housing, close proximity to
the capital Bratislava and the massive investments putting
Trnava onto a firm path into prosperity mean that the city
should benefit from a very strong capital growth, similar to
Bratislava itself.

We are pleased to say that after months of negotiations, we
have been able to secure 30 units in a rare new development
before they get snapped up by local families. With completion
at the end of 2005 and prices from only £ 30,000 this is an
amazing opportunity to take part in one of world's most
promising markets!

These superb apartments will go fast, so, don't miss our
email alert in the next few days!

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As a registered member of Slovakia Investment Property you
will always receive first notification of developments and
first opportunity to choose and reserve your preferred unit.

If this email was forwarded to you by a friend and you are
not a registered member, please remember that you need to
register in order to be able to receive notifications and
view our deals.

To join FREE of charge, please follow the link below:
http://www.slovakiainvestmentproperty.com/register.php

PLEASE REMEMBER:
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Slovakia Investment Property is not your typical UK
company of UK nationals claiming to be foreign property
experts. Not only have we teamed up with the best local
experts in Slovakia, we are Slovak nationals with first
hand experience of the Bratislava market. And yes, we
also put our own money into the opportunities offered.

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4) WIN a Bottle of 'Medovina'! (Prize Draw)

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And now, as promised for 2005, our new competition! From now
on, you will have the chance to win some of Slovakia's best
wines and liquors - every month! All you have to do is email
your answer to our Question of the Month before 31 January
to: competition@slovakiainvestmentproperty.com.

You will be entered into a prize draw to WIN a bottle of
"medovina" - Slovakia's famous liquor made of honey ("med")
and herbs that has been appreciated for many centuries.

It's as easy as that! We will contact the winner to obtain
the postal address. Good luck!

Question: "Which countries (if any) are you considering for
your overseas property purchase?"

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5) Tell Us What You Think!

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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

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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, may 2005 be a great year for you!

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

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