Slovakia Investment Property

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Slovakia Investment Property Newsletter
August 2006 - Issue # 23
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End of August... the summer's slowly coming to an end
and with it a very busy tourist season. The increasing
popularity and curiosity about Slovakia is witnessed by
steadily rising visitor numbers.

And it's not only foreigners - more and more Slovaks are
rediscovering the beauties of the home country after
years of taking holidays abroad. In line with the demand
tourist facilities are being built and upgraded, services
improved.

So, how can a property investor take advantage of this
starting boom? Read on...

And, in case you've missed any of our previous newsletter
issues, they are available for you here:

www.slovakiainvestmentproperty.com/newsletters.php

In this issue you will find:

1. Slovakia Top Property Spot in 2007
2. Untapped Market, Huge Potential
3. Beautiful Chalets in Tourist Hotspot - Just Released!
4. Tell Us What You Think!

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

1) Slovakia Top Property Spot in 2007

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Knight Frank, international estate agency and property
consultancy with offices in 30 countries on 5 continents,
predicts Slovakia and Slovenia to be the Eastern European
property hotspots in the year ahead. Liam Bailey, head of
Knight Frank Residential Research considers them "two
countries with the best potential for further growth".

* * *

According to Fitch Ratings' latest analysis, Slovakia
should be able to adopt euro in 2009, as planned.
Meanwhile, the prospects for the rest of Central Europe
joining the single currency have worsened over the last
12 months. Fitch does not see chances for the Czech
republic to join before 2011, Poland before 2012 and
Hungary by 2014 at earliest. Estonia is expected to be
able to adopt euro by 2009/10.

* * *

Bratislava will soon benefit from yet more affordable flights.
Wizzair, one of Central Europe's largest low-cost carriers,
will make the city one of its operating bases, launching
flights to 13 destinations from Bratislava airport in early
2007 - including London and Cork (Ireland). Bratislava
airport is already served by Sky Europe, Ryanair, EasyJet,
as well as a number of full-service airlines.

* * *

In spite of rising interest rates mortgages are continuing
to see increasing popularity among Slovaks. By 31.6.2006
Slovak banks had provided mortgages in the total sum of
SKK 77.3 billion (GBP 1.4 billion). In the first 6 months
of 2006 alone, Slovaks took out mortgages of SKK 10.4 billion
- an 18.1% increase y/y.

Mortgages continue being affordable despite rates being at
their highest since mid 2004 (after three subsequent base
rate increases this year mortgage rates range from 6-7%+).
Althouh a further rate hike is expected before the end of
the year, the industry predicts the mortgage growth to
continue, curbed by strong ownership desire of Slovak
population and increasing disposable incomes.

Meanwhile, the new government plans to reintroduce the
abolished mortgage bonification for young Slovaks. Anyone
under the age of 35 and (income) not higher than 1.3 times
average income in Slovakia will be able to take advantage
of a subsidized mortgage rate. The aim is to enable those
on lower incomes and in economically less developed regions
to become a home owner.

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2) Untapped Market, Huge Potential

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Over the last year a significant new trend has started to
be evident in the Slovak market. While until recently the
focus of most investors has been on city properties, in
search of longer term letting to companies and professionals,
today increasingly many are exploring previously untapped
opportunities in some of Slovakia’s top tourist locations.

The benefits are promising: growing holiday-let returns as
well as exceptional capital growth potential. Not to mention,
of course, the joys of owning a holiday home in one of the
most beautiful corners of Europe.

Prior to attracting foreign buyers, Slovakia's main tourist
and ski centres have already seen a huge surge in popularity
among local second home buyers. Owning a holiday home in
the mountains has, over the last year or two, increasingly
become a matter of not only convenience but also prestige.

Responding to the demand from mostly Bratislava families,
several new developments have been offered to holiday home
buyers in the last 15 months. They have two things in common:
extremely fast sales (several dozens of units often selling
out in a matter of a few weeks) and higher and higher prices.

Although prices of some of the newest homes in holiday regions
already reached top prices in central Bratislava, developers
are optimistic. It seems they have good reasons to be.

First, they bank on the short supply. Due to Slovakia’s strict
protection rules for national park areas (covering much of
the mountain & ski regions) new developments in the country’s
most popular holiday destinations are (and will continue to
be) rare. Second, there will always be a sufficient number of
wealthier local buyers willing to pay up to own a prestige home
in their favourite Slovak winter (or summer) holiday spot.

Among the several popular mountain ranges in Slovakia the
High and Low Tatras and Velka and Mala Fatra are the most
well known. (Central Slovakia and centre-north.)

The Low Tatras feature the best skiing and ski resorts, most
popular being Jasna and Donovaly (Jasna is the largest & best
ski centre in Central Eastern Europe). The best resort in the
High Tatras is Strbske Pleso with its beautiful scenery but
relatively limited size.

Holiday letting
---------------

If one is to have any chance of letting a property to holiday
makers, it needs to be in or very close to an established and
popular ski resort or main tourist centre. Some areas, such as
the Low and High Tatras, have also the advantage of being visited
in both winter and summer which is not the case in other ski
centres such as Velka Raca (near Zilina).

Occupancy in dual season resorts is consequently much higher
than in any other area of Slovakia, and properties can achieve
up to 30-50% annual occupancy provided located in one of the
top tourism spots. The farther away the less suitable for
letting (more than 10-15 minutes drive or ski bus ride will
generally dramatically lower rental appeal of a property).

Resorts with winter season only will rarely suit for letting
(if any profit is to be achieved) as annual occupancy will
be as low as - or lower than - 20%.

One needs to consider rates are still low in Slovak tourist
centres (SKK 250-800/night/bed depending on season and quality,
up to SKK 1,200 for high standard accomodation in top season -
Year End/New Year). Above rates apply to self-contained chalets,
homes, apartments in top tourist areas close to all attractions
and facilities.

This however means that only buying a property at relatively
low m2 (sq meter) price will give an investor a return on
rental. In the best of circumstances a 4-8% NET yield is
achievable (although relatively rare). The very steep prices
of a majority of the new projects make them suitable for second
home buyers looking for own use rather than rental returns. Most
of the new holiday resort properties sell at GBP 900-1,400/m2
(incl. VAT) and will barely yield 1% net.

It is still possible to buy at a reasonable price, making
holiday rentals a profitable option. An older home or cottage
can also prove a good holiday-let, however, a location close
to the ski centres and other attractions is a must if it is
to appeal to tourists. The good news is, rates for tourist
accomodation in main holiday centres are going up year after
year (though not as fast as purchase prices in such areas).

Properties can be let to holiday makers through Slovak
travel agencies; there are several that specialize in self-
contained accomodation for winter & summer holidays. For the
more hands-on owners, running a website or using one of the
international holiday rental sites can prove worthwhile.
Important to keep in mind is travel agents will only do the
letting (booking); the owner/investor has to arrange cleaning,
washing, check-in/out service. In some of the new developments
of chalets or apartments such services can be provided (at a
fee) by the developer or administrator. In all other cases
a common solution is finding a local to perform such tasks
(often at comparatively low fees).

While holiday letting has its particularities and several
issues need to be considered with care, the results (provided
one gets it right) can be extremely gratifying and often more
profitable than long term rental. This is increasingly proving
to be true in some of Slovakia's magnificient mountain resorts.

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3) Beautiful Chalets in Tourist Hotspot - Just Released!

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Today reservations are opening on 9 stunning new chalets
in one of Europe's most beautiful holiday locations.

The high quality houses are perfectly located and suited as
both a gorgeous vacation home and holiday-let investment:

* a walk away from the sought-after Liptovska Mara reservoir
as well as Aquapark Tatralandia (Slovakia’s # 1 most
visited attraction and Central Europe’s largest Aquapark)

* the country’s # 2 tourist attraction Thermal Park Besenova
is a few minutes drive away (the two Aquaparks - open all
year round - welcome nearly 1.2 million visitors each year)

* minutes from four ski centres, including Central Eastern
Europe’s best & largest ski resort Jasna

* just 5 minutes from Liptovsky Mikulas, a beautiful
historic town surrounded by the majestic hills of the
Low Tatras, West Tatras and Choc mountains

The exclusive development of architecturally stunning
two-story, 3-bed 2-bath houses benefits from a reception,
restaurant, bar and conference room, as well as:

* fantastic quiet setting, surrounded by breathtaking,
unspoiled nature and greenery, yet just a few minutes
walk to 'civilization'

* amazing views of the Tatra mountains, Liptovska Mara
lake and the picturesque village of Liptovsky Trnovec

* unlimited possibilities of Slovakia's top summer and
winter tourism destinations on your doorstep

* ease of access by road, rail or air
(Poprad international airport just 45 minutes away)

And, if you're looking for a lucrative investment, you
will be pleased to know that rental facilities are in
place. What's more, travel agents have been operating
holiday lets of identical homes with extraordinary success.

If you're looking for a viable holiday-let investment
in Slovakia, this is the place to be! Thanks to the
dual season main tourist areas in Liptov experience
unmatched annual occupancy rates of up to 50%.

And, the best at last...

The stunning & spacious chalets, beautifully designed,
built of brick and clad with stone and wood, start at
just 80,000 GBP (3 bed, 2 bath house over 2 floors) -
including a large land plot and VAT!

At just SKK 27,000 + VAT/m2 (net living area) the homes
are extremely affordable, considering most new properties
in Slovakia's main holiday areas are currently offered at
SKK 38,000 - 65,000 + VAT/m2. (1 GBP = approx. 55.5 SKK)

Only 9 homes are available, so, don't miss out... email
us now to receive your information pack!
Email to: info@slovakiainvestmentproperty.com

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4) 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,

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

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