Slovakia Investment Property

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

=========================================================
Slovakia Investment Property Newsletter
November 2006 - Issue # 26
=========================================================

Welcome to the last issue of our Slovakia newsletter in 2006.
Your joint December 06/January 07 issue will be delivered
in late January 2007.

Please note, as every year, our offices will be closed for
winter holidays, between 18 December and 8 January. We will
reopen on Monday, 9 January.

After several months of covering all segments of Slovakia's
commercial property market, land investments, and the impact
of global investors and developers, today we will return to
the residential market with an update on sales and rental
values investors can expect in their main areas of interest.

As ever, 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. Mortgages and Other Trends
2. Residential Market Update: Sales and Rental Values
3. Hot Deals in Early 2007!
4. Tell Us What You Think!

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

1) Mortgages and Other Trends

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

The slovak currency continues to break records on its
super-fast appreciation path. This week the slovak koruna
(crown) reached its new historic maximum
with an exchange
rate of 35.475 SKK/euro.

* * *

For those of you interested in macroeconomic data and updates,
you can see an english-language overview at the following
site (Trend is Slovakia's main monthly economic and business
magazine)

http://ekonomika.etrend.sk/14495/slovensko/slovensko-v-ekonomickych-cislach

In the english section of the site you can read (or subscribe
to) weekly political and economic news from Slovakia.

* * *

According to a new study (Gfk) only 6% of Bratislava region
inhabitants currently have a mortgage taken out for a property
purchase. They are mostly middle aged population with a net
after tax income of over 1,400 euro per month per family,
living in a childless household or household with one child.

Another 7% of people living in the Bratislava region are paying
back a loan for renovation of an apartment or house; many of
them belonging to lower to middle income groups.

The survey also shows that nearly a third of Bratislavans
planning to purchase a home in the near future are going to
finance it with own cash reserves, without mortgages or loans.
The majority of such buyers are over 40 years old, while
a significant portion of the younger population, in particular
buyers in their early to late 20's, are interested in financing
their new home with the help of mortgage products.

The popularity of mortgages keeps growing in spite of the
strong uplift in interest rates. After four base rate hikes
since early 2006, mortgages in Slovakia are now nearly 2%
more expensive than last year. Not even a new forecast rate
hike next year is expected to significantly dampen Slovak
buyers' interest in bank financing, according to industry
experts.

(Currently mortgage rates range from 6-8% p.a., depending
on period of interest fixation, lending bank and financial
status of the applicant. The base rate after the last hike
in late September stands at 4.75%.))

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

2) Residential Market Update: Sales and Rental Values

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

Let's face it... most investors buying property abroad, and
in particular in Central Eastern Europe, are after capital
growth... the more and the faster the better!

So, how does Slovakia deliver?

First, I can't stop stressing it often enough - there is no
such thing as getting rich fast! There is no growth overnight
(or in a month, or even a year) with no work, totally hands-off.
Property must be viewed as a long (or at least medium) term
investment, and then, only then, it truly pays off. And
by medium to long term I mean 5-10 years and more.

Sure, we can see property prices rising year by year, but,
let's think about it for a minute. Just because today new
properties cost 10, 15, or 20% more than a year ago, does
this mean you can sell your property at 10, 15 or 20% higher
price than what you paid for it last year? No. It doesn't
work that way, no matter whether in Slovakia, Poland, France,
UK... Developers have a far greater marketing reach and will
always be able to get higher prices for their projects than
an estate agent selling on your property.

That said, property prices have continued rising in most
regions of Slovakia where there is demand from buyers. The
construction rates are still lower than in other EU countries
and the shortage of properties will take many years to be
remedied. However, regions with high purchasing power -
led by the capital Bratislava - are finally seeing a more
active development market than a few years ago. The result
of buyers having a more decent choice for the first time in
years is that the type of property and exact location are
more and more important these days.

BRATISLAVA
----------

As in the past, the city centre (BA I, Old Town) is the most
prestigious and sought-after district of the capital. Better
off locals and foreign buyers both compete for the limited
number of properties that come up for sale here. As there's
virtually no new(ish) residential construction in the centre,
properties are mostly pre-war blocks of flats.

Due to high demand and very short supply Bratislava I has
seen the highest price growth, in any given year. We've
seen prices of city centre apartments going up by roughly
15%, although it depends on each property and top-end flats
have been increasing even more.

Note: prices in the following overview are quoted in SKK
and per 1 m2. Due to fast changing exchange rates this is
a more viable option. (Recently the rates have been 1 GBP
= 52 to 54 SKK.) Current rates can be seen at www.xe.com/ucc

Today, prices of apartments in the first district range
from SKK 50,000-130,000/m2. While at the lowest range are
properties in usually poorly maintained blocks, good mid
range apartments can still be bought from around SKK 60,000
a square metre. (At current rates that means decent 1 beds
start from 60k GBP, good 2 beds from just under 100k. Of
course a top end and large size 1 bed can also cost you 100k
and over 200k GBP for 2 beds is also possible.)

Given the very solid rental demand for Old Town properties,
and the fact the above prices are far lower than city centre
properties in other Central European capitals, apartments in
central Bratislava offer, in our view, the best investment
potential in Slovakia.

So what about other districts?

In BA II, III, IV and V the type of construction and exact
area are decisive. While properties in BA I are almost
exclusively classic/pre-war (built in the 1900's to 1950's),
the other four districts of Bratislava offer a mix of communist
style blocks (often built of concrete panels hence 'panelaky')
and new builds.

Prices of new apartments have been rising, in more popular
areas by estimated 10-12% over the last 12 months. Even in
areas of less demand, for example on the outskirts of the
city, have the prices gone up by a minimum of 5% or more.
On the other hand, communist built apartments have seen no
growth, although the decline in prices witnessed since late
2004 has ceased in most areas now.

Prices of new apartments in Bratislava II currently range
between SKK 40,000-70,000 +(19%)VAT/m2. The more sought-
after western parts (Nivy) and central parts (Ruzinov) of
BA II command higher prices (generally SKK 50-60,000 + VAT/m2)
while in the less popular areas in the east of BA II district
new flats can be had at under SKK 40,000 + VAT/m2.

Bratislava III has pockets of new construction, including
a larger number of new developments in the previously more
secluded and exclusive Koliba area, and the vineyards, where
more developments will be going up in the future, after
rezoning. Prices of new build apartments in BA III are
between SKK 40,000-70,000 + VAT/m2. A planned exclusive new
project by Orco group is expected to be released at over
SKK 100,000 + VAT/m2.

Bratislava IV is again a very mixed district, with more
popular areas closer to the centre (such as Karlova Ves)
offering new properties at higher prices than the much
less sought-after locations of Dubravka, Lamac or DNV.
New apartments can be purchased at SKK 35,000-80,000 + VAT/m2
(only 1-2 projects command prices near the top level, while
most come under 50,000 + VAT/m2).

And, finally, BA V, the fifth district and the only one
south of the Danube. Traditionally the least popular place
with Bratislavans, the area of Petrzalka suffers due to its
communist housing estates. The high density panel blocks
cover virtually all of Petrzalka, while social infrastructure
is poor with limited retail, administrative or leisure
facilities.

Development has until recently been very limited due to
the low demand. However, thanks to having the lowest property
prices of all Bratislava (and good access to the city centre),
the area is seeing increasing demand from those buyers who
can't afford to purchase elsewhere. Developers follow, and
the number of new projects in Petrzalka is slowly growing.
They can be bought at SKK 30,000-45,000 + VAT/m2.

RENTAL
------

Bratislava is still the 'safest' market in terms of rental -
apart from holiday lets in ski and tourist resorts. However,
as anywhere in Central Eastern Europe, investors who want to
have a chance of renting their property need to understand
who the tenants are, what they want, and at what prices.

The two main groups of tenants are, traditionally: expats,
executives, foreign professors at the one end; lower income
workers (often migrants from eastern and central Slovakia)
and students at the other.

Demand from foreigners and companies has been very strong
- and growing - for the last 15 years. However, these tenants
are almost exclusively looking for city centre (BA I) properties,
and of good quality.

Rents (net of utilities) in the Old Town of Bratislava are
as follows:

1 beds - 450-600 euro/month (more is usually only possible for
exceptional top end and/or very large apartments in best
buildings and areas)

2 beds - 600-850 euro/month (again, depending on size in m2,
quality, exact location and standard of building; in some
cases up to 1,000 euro is achievable for top quality)

Due to the high demand and security of rental, as well as
reasonable yields (5-7% p.a.), city centre apartments can
be considered the best option for buy-to-let.

On the other hand, the second group of (Slovak) tenants
consisting of lower income younger workers and new migrants,
as well as students, has different requirements. Location and
standard is much less important, and budget is the main issue.
Demand is for cheap apartments with rents up to 300-350 euro/
month. Tenants often keep their costs down by sharing such
properties.

There is demand from this tenant group to rent a property
in almost any area of Bratislava provided the rents match.
Due to lowest rental values, Petrzalka is filled with students
and new migrants, renting mostly cheap panel block apartments.
So is the Dubravka area in BA IV. Low cost apartments in Ruzinov
are also popular.

Anything that does not target or appeal to the above two tenant
groups can be very hard to rent. As in most of Central Europe,
middle class local population does not rent property, they
buy resp. live in owner occupied homes.

So, the advice is... do your research, buy well, hold for
several years... and then you will enjoy the fruits of your
investment!

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

3) Hot Deals in Early 2007!

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

If one of your New Year resolutions is to take advantage of
the region's fast growth and buy an property in Slovakia,
we've got great news for you!

In January, we will be launching a fantastic high spec
holiday development in a stunning location near top skiing,
aquaparks and on a lake's shores.

The tourist complex will offer a range of facilities including
concierge, restaurant, cafes, conference rooms, leisure
amenities.

As with all of our projects, investors will not only benefit
from the top location and high standards, but also unmatched
prices - lower than any similar new properties. Studios will
start from unbelievable 20,000 GBP!

With rental facilities in place, these stunning properties
will be perfect for investors looking for both strong capital
growth and solid yields. Plus... an enviable holiday home
in one of the most stunning corners of Europe.

You can register your interest for this amazing deal now.
However, further details will only be provided in early 2007.
Subject to planning approval, a full information pack will
be sent out in January to all those who'd registered for
this project.

* * *

Another exciting opportunity will appeal to all those knowing
that you can never go wrong with a top property in a prestige
location. And our small luxury development in the heart of
Zilina's historic centre is nothing less that that - the
best of what you can get in Slovakia's third largest city.
Zilina is also the economic power house of north-western
Slovakia and recipient of the country's largest foreign
investment, the Kia car plant.

Only nine high end apartments will be available, at prices
from 74k GBP (incl. VAT) for a large 71 m2 one bed apartment,
111k-132k GBP for two bedrooms (106-125 m2), and 139k-169k GBP
for spacious three bed flats (127-160 m2). Short and long term
executive rental structure is in place.

With a shortage of hotel capacities and high quality
accomodation in this fast growing metropolis, and ever
increasing numbers of business travelers and executives
(including automotive) in Zilina, investors with high
quality properties in the historic city centre can expect
good returns on business rentals.

A retail store and a two storey cafe are also available to
purchase within the building.

Please email us to receive further information.

* * *

For all of you registered for our long-awaited new development
on the edge of Bratislava's city centre, as you are aware
there have been significant delays with the project. We are
therefore unable to give any information on a release date
at this stage, but are hoping for more positive news in
January.

* * *

And, don't forget... a large number of resale and period
properties are available in Bratislava and other regions
of Slovakia. For larger investors, we have commercial
properties from 1 - 100 million GBP, as well as several
deals and joint-ventures for foreign developers.

Whatever your requirements, email us at:
info@slovakiainvestmentproperty.com

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

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