Slovakia Investment Property

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Slovakia Investment Property Newsletter
August 2007 - Issue # 34
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Welcome to the August edition of your Slovakia Newsletter.

First of all let me thank all of you who have participated
in our last month's survey. We have found the answers very
helpful and appreciate your time and honesty.

Your views of Slovakia as both holiday and investment
destination were largely very positive, with many of
you recalling happy experiences from your visits to the
country.

In this issue we turn our focus back onto the development
of the Slovak property market and look at the recent
growth of property prices in the capital as well as
several secondary cities.

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

www.slovakiainvestmentproperty.com/newsletters.php

(Many of you have requested information on Slovak mortgages.
We have covered bank financing in Slovakia in our June 2007
newsletter - see link to Newsletter Archives above. For any
further questions don't hesitate to contact us.)

In this issue you will find:

1. Growing Golf
2. Property Market (and Prices): Full Speed Ahead
3. Tell Us What You Think!

===================== MUST READ NEWS ====================

1) Growing Golf

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In QII 2007 the Slovak economy grew by an impressive 9.2%.

Industrial production has also seen an accelerated growth,
coming in at 12% in June (second highest in the EU, according
to Eurostat).

* * *

Slovakia currently boasts three 18-hole golf courses
(Tale, Bernolakovo, Velka Lomnica). The number of smaller
golf courses is also growing - among the newest additions
are 11 holes (of planned 36) in Bac, 6 in Sliac, as well
as new holes in Velka Lomnica. In Brezinky (near Tale)
a new 27-hole golf course is being built. Lozorno is to
get an 18-hole golf course before the end of the decade.
New courses are also likely to be built in Rajec, Senec
and Zahorie.

Currently there are only 3,500 golf players in Slovakia
(compared to 30,000 in the Czech republic).

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2) Property Market (and Prices): Full Speed Ahead

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NOTE: Prices quoted throughout this article are in slovak
korunas (SKK). Currently the exchange rates are as follows:
1 GBP = 49.9 SKK
1 EUR = 33.7 SKK
1 US$ = 24.7 SKK

Current prices
--------------

Average apartment prices in Bratislava are currently between
47k-54k SKK/m2. New flats are sold at an average of 60-70k
SKK/m2 (incl. VAT), while communist built properties (that
are in large majority) are sold at an average of 40-45k GBP/m2.

Naturally prices vary strongly depending on location (as
well as standards - original or renovated). With prices of
communist flats in less sought-after areas such as Dubravka,
Trnavka, Dolne Hony, Vrakuna, Podunajske Biskupice, Vajnory,
Devinska Nova Ves, etc starting at just over 30k SKK/m2,
40k to 55k SKK/m2 is paid for the same type of properties
in more popular locations such as Ruzinov and Nivy.

New built units cost from around 40k SKK/m2 (in least
demanded areas) up to over 140k SKK/m2 including VAT
in top developments.

A separate chapter are properties in the sought-after city
centre, BA I district (Old Town), with prices - of mainly
pre-war (classic) apartments - ranging from around 70,000
SKK/m2 up to 130k SKK/m2, depending on exact location,
quality of building, standards of renovation, etc.

Property sizes in Slovakia (for both older style and especially
new built apartments) are generally larger than in the UK
and many other markets. Of the just over 14,000 completed
properties in 2006 (including flats and houses) the average
unit size was 116 m2.

Continued growth
----------------

As expected, the strong (and growing) demand for homes
coupled with fast increasing purchasing power on the one
hand, and low supply of properties and EU's lowest
construction rates on the other, have resulted in a
continuous growth of property values in Slovakia.

Since there is little official data related to property
prices in the country and in particular its different regions,
available growth figures are mainly issued by some of the
larger estate agencies in Bratislava, as well as by the
National Bank of Slovakia (NBS), the country's central bank.
The latter source is also the most reliable, though it only
looks at average prices in the country and its regions
without taking into account important factors such as
type of properties, location, year of construction, etc.

Average property prices across the country increased by
16.3% y/y in QI 2007 and came to an average of 33 721 SKK/m2.
In QII 2007 price per square metre went up even stronger -
by 21.3% y/y. Average Slovak prices reached 36 383 SKK.
(Data published by NBS.)

Detailed NBS data follows below.

Average prices in Slovakia (all properties)
(in SKK/m2)

2002 - 17,832
2003 - 24,901
2004 - 28,746
2005 - 26,088
2006 - 30,661
QI 2007 - 33,721
QII 2007 - 36,382

Bratislava
(in SKK/m2)

2002 - 23,457
2003 - 35,554
2004 - 38,704
2005 - 34,594
2006 - 41,464
QI 2007 - 45,123
QII 2007 - 47,808

Trnava
(in SKK/m2)

2002 - 11,142
2003 - 12,055
2004 - 19,845
2005 - 19,535
2006 - 21,449
QI 2007 - 22,371
QII 2007 - 23,927

Zilina
(in SKK/m2)

2002 - 12,171
2003 - 15,182
2004 - 13,231
2005 - 13,612
2006 - 15,275
QI 2007 - 17,485
QII 2007 - 20,478

Nitra
(in SKK/m2)

2002 - 10,876
2003 - 12,205
2004 - 17,248
2005 - 12,148
2006 - 14,258
QI 2007 - 16,051
QII 2007 - 18,020

Trencin
(in SKK/m2)

2002 - 13,757
2003 - 13,175
2004 - 18,986
2005 - 10,395
2006 - 14,262
QI 2007 - 16,556
QII 2007 - 17,557

Banska Bystrica
(in SKK/m2)

2002 - 10,730
2003 - 14,211
2004 - 15,209
2005 - 12,629
2006 - 15,410
QI 2007 - 16,337
QII 2007 - 19,233

Kosice
(in SKK/m2)

2002 - 13,904
2003 - 14,762
2004 - 23,460
2005 - 15,740
2006 - 17,489
QI 2007 - 19,896
QII 2007 - 22,526

Presov
(in SKK/m2)

2002 - 10,808
2003 - 14,007
2004 - 15,204
2005 - 17,842
2006 - 18,425
QI 2007 - 21,714
QII 2007 - 20,511

The above figures are averages across all property types and
as such mainly reflecting the most frequent type of housing
in Slovakia - communist built flats. The comparatively very
rare new built properties (and equally few numbers of period
properties) have therefore little influence on the average
prices.

More than half of all Slovak population and a vast majority of
inhabitants of larger cities live in 'panelaky' - communist
built blocks of flats made of massive concrete panels, often
built with substandard construction materials and low quality
design and layouts. Many of these flats have of course been
renovated by their owners, though they continue to be far less
desirable than new, modern standard properties.

Over a third of all such blocks are in Bratislava (11,000).
However, the capital also represents virtually all of the
high-end luxury new construction in Slovakia, with prices
of (a few) top-end developments reaching 140,000 SKK/m2.

In most larger Slovak cities property prices have been increasing
steadily for the last decade. As seen in the figures above, the
year 2005 represents an anomaly - after a steep rise in 2003-4
came a subsequent price drop in 2005.

This was caused by the expectations of Slovak home owners prior
to the May 2004 EU entry that would allow all foreigners to buy
real estate in the country. With many Slovaks expecting to
see wealthy foreigners come and buy up comparatively cheap
Slovak property and hence increase prices, sellers have been
waiting to sell after EU-entry only. The market in late 2003
and 2004 has therefore seen extremely few transactions as nearly
no property was offered for sale. This caused the few homes
available for sale to achieve far higher prices than usual.

Naturally, no invasion of foreigners buying up communist
estate flats (the vast majority of Slovak housing) has taken
place, and by 2005 prices have come back to usual levels as
the market went back to normal functioning.

Top investment destination
--------------------------

With booming economy (growing at 8-9% p.a.), strong domestic
demand from home buyers, low transaction costs and growing
property values, it's not surprising to see Slovakia topping
the lists of major international property companies as Eastern
Europe's best investment destination.

Knight Frank, Savills, Jones Lang LaSalle, Global Property
Guide and many more all see Slovakia as the region's most
attractive property investment destination.

Bratislava going strong
-----------------------

In particular the capital Bratislava is viewed as an ideal
combination of high growth potential with low levels of
investment risk.

Being home to much of Slovakia's highly skilled and educated
workers, base of the largest number of domestic and foreign
companies, and boasting far higher purchasing power and
income levels than the rest of Slovakia (and extremely low
unemployment), it is easy to understand why Bratislava is
the first choice of most global property investors active
in the Slovak market.

Not to mention the Slovak capital boasting higher per
capita GDP than the towns and villages across the border
in Austria (not counting Vienna of course).

According to analysis from official and bank sources the
capital city currently lacks 55,000-80,000 properties. With
around 3,000 units built annually, it may take a long time
to satisfy even this present demand.

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3) 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