Slovakia Investment Property

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Slovakia Investment Property Newsletter
October 2007 - Issue # 36
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Welcome to the new issue of your Slovakia Newsletter.

While there are concerns about mortgage lending as well
as potentially volatile property markets in many parts of
the world, Slovakia's booming property market and strong
demand from local home buyers continue to fuel banks'
appetite for new mortgage business. Apart from this and
other positive news from Slovakia in this issue we also
reveal what the most popular homes are for Slovak buyers.

And of course if 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. Slovak Banks Continue Keen on Lending
2. Overseas Investment Property Boosted by UK Tax Cut?
3. Most In-Demand Homes by Bratislava Buyers
4. Tell Us What You Think!

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

1) Slovak Banks Continue Keen on Lending

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The current income of Slovak households has increased (nominally)
by 10.7% y/y in the first half of 2007, according to the
Slovak Statistical Office. The real increase was 7.9% y/y.

The public deficit should not exceed 2.7% of GDP this year
(prognosis of the Slovak Ministry of Finance).

* * *

A decision has been made at last on the location of the new
ice hockey stadium for the ice hockey World Cup Slovakia
will be hosting in 2011. It will be built in Tehelne Pole
in Bratislava II, an area already housing several sports
facilities.

* * *

In contrast to many of world's banks growing uneasy about
mortgage lending, Slovak banks continue to fight for home
buyers' business.

With a booming property market, growing wages and low
inflation, loans to Slovak households increased by 22.3
billion SKK (670 million euros) in the last six months.
The total indebtedness of Slovak households is still low
at below 12% of the GDP.

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2) Overseas Investment Property Boosted by UK Tax Cut?

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The rate of capital gains tax for UK property owners selling
their investment properties and second homes is set to be cut
from 40% to a flat rate of 18%. Chancellor Alistair Darling's
announcement is likely to make the property investment sector
more dynamic. UK investors will no longer need to hold onto their
properties for many years to offset the steep tax. In particular
overseas investment properties (offering higher returns than UK
buy-to-let) could benefit from this dramatic tax cut.

* * *

Research from mortgage specialist BM Solutions has showed
that there is little demand for buy-to-let mortgages outside
the UK. About 79% of UK landlords agreed that there is a need
for specialist buy-to-let loans. However, 94% of German,
92% of Polish and 80% of Portuguese landlords said that no
such specialist mortgages are required.

The report also showed that 70% of UK landlords used a broker
to arrange their (buy-to-let) mortgage – the highest level
in Europe. As opposed to that, only 26% of German, 23% of
Polish and 6% of Portuguese landlords used any intermediary
to arrange finance for their property purchase.

There are also significant differences in the loan terms.
Typical for the continental countries are lower LTVs, with
average 38% in Poland, 39% in Portugal, and 66% in Germany.
Fixed rate mortgages are the most popular among Germans, with
93% of landlords opting for these products for their security.
On the other hand, the majority of UK, Portuguese and Polish
landlords opt for variable rates.

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3) Most In-Demand Homes by Bratislava Buyers

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Demand for homes (or rather flats) still considerably exceeds
the supply in Bratislava. The result are the steadily growing
prices of apartments; and there doesn't seem to be an end
to this trend in sight.

To capitalize on the strength of the local home buyers'
demand, Slovak as well as increasingly foreign (Austrian,
Israeli, Czech, Dutch) developers are preparing new residential
projects to cater to all segments of the Slovak market.

But which projects - and properties - are most likely to
appeal to the average Bratislava home buyer? If there is
such a thing as the most popular type of property, how
does it look like?

Well, to start off, it is an apartment. Most housing in
Bratislava (and to some extent also other Slovak cities)
is represented by apartment buildings, apart from properties
on the outskirts of the city and in surrounding satellite
towns where family houses are most common.

Naturally, certain city locations are more sought-after than
others. If budget was no issue, the ranks of desirability
(from the most to the least desirable) might be as follows:

Stare Mesto (BA I district/Old Town); Koliba (BA III),
Nivy and Ruzinov (BA II), Nove Mesto, Kramare (both BA III),
Prievoz (BA II), Karlova Ves and Dlhe Diely (BA IV), Raca
(BA III), Petrzalka (BA V), Dubravka (BA IV), Podunajske
Biskupice and Vrakuna (BA II), Vajnory (BA III), Dolne
Hony (BA II).

When it comes to (mainly detached and semi-detached) family
houses just outside Bratislava, popular villages and satellite
towns are Zahorska Bystrica, Stupava, Svaty Jur, Pezinok,
Cierna Voda, etc. In these locations properties are mainly
houses and demand for apartments is extremely low.

Prices, not surprisingly, also play a significant role
for many home buyers, and often cause them to compromise
on location and/or size.

That is why generally the most in demand apartment by
the average buyer has one bedroom and around 50-65 m2.
Also popular (depending on type of buyer) are two bedroom
flats (especially around 80 m2 rather than larger) and
three bedroom family flats, and for young single buyers
studios (40-45 m2). Apartments over 120 m2 are less in
demand - apart from exclusive locations and prestigious
high-end buildings or developments. Generally, the less
sought-after and cheaper location, the harder to sell are
large properties, while in the best neighbourhoods even
flats of 200 m2 can find buyers easily.

Layouts are increasingly important; Slovaks have been used
to the typically poor layouts of the communist built blocks
of flats, and are appreciative of modern, practical designs
of (most) new developments. A very popular feature for local
buyers is a balcony or terrace. In new buildings underground
parking is a must with most buyers in Bratislava.

A very large proportion of new home buyers in the Slovak
capital are young people and couples in their mid to late
twenties, often using mortgages supported by their well
paying jobs. Those who have recently moved to Bratislava
from other regions often opt for cheaper, communist built
flats, starting from smallest sizes. Large properties tend
to be bought by older buyers, in their 30s and 40s, often
with family. These are also the buyers who tend to buy cash
in many cases, using their savings.

Increasingly there is also foreign investors purchasing in
Bratislava to take advantage of the healthy and fast moving
market. While most Slovaks are buying a home to live in,
investors only have returns in mind, hence the criteria
are based on ease of letting and resale and of course
price/value.

So what about the prices?

In the five districts of Bratislava, prices are broadly
along the following lines:

BA I: 70,000 - 150,000 SKK/m2
BA II: 45,000 - 90,000 SKK/m2
BA III: 45,000 - 100,000 SKK/m2
BA IV: 35,000 - 60,000 SKK/m2
BA V: 35,000 - 60,000 SKK/m2

The top ranges represent mainly flats in new developments
(in such cases prices include 19% VAT).

With a fast growing economy, high purchasing power and Slovak
buyers' thirst for better quality homes, it's unlikely for
prices to stay at the current level for long.

The healthy market conditions, ease of resale and steady
capital appreciation are the main reasons investors regard
Bratislava and Slovakia as one of the best property
opportunities of today.

* * *

SLOVAKIA
--------

If you are looking for residential or commercial property
in Slovakia, whether new build or classic, please call or
email us at info@slovakiainvestmentproperty.com. No matter
what your requirements, we will be pleased to help you
find a suitable property.

GERMANY
-------

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Email us your requirements at info@alphare.net.
Alternatively, to learn more about the fantastic advantages
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www.alphare.net.

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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