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Slovakia Investment Property Newsletter
November 2007 - Issue # 37
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Welcome to the November issue of your Slovakia Newsletter,
which is also this year's last edition. The first 2008
newsletter will be a joint December/January issue.

Before coming to our usual news roundup and feature article,
note our office's opening times during the Christmas and
New Year period.

As every year, the office will be closed from 22nd December
and will reopen on 7th January. In the meantime, we wish you
very happy holidays.

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. Record Growth, New Investments
2. Slovakia in Schengen Zone + New Vienna-Bratislava Link
3. Accelerating Property Prices... How Can You Benefit?
4. Tell Us What You Think!

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

1) Record Growth, New Investments

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

Slovakia's GDP rose by 9.4% y/y in QIII, according to Slovak
Statistical Office. (To compare with other high growth
economies of CEE, Poland's GDP grew by 6.4%, Romania's by
5.7%.) The seasonally adjusted GDP in Slovakia grew by 9.7%
compared to the same period of 2006.

* * *

Slovakia has become the Presidency-in-Office of the Council
of Europe’s Committee of Ministers for the first time in
its history.

* * *

Johnson Controls, one of world's leaders in the production
and development of car components, is making Bratislava its
base and centre for Central and Eastern Europe. It opened an
Automotive Business Center in the Slovak capital.

Johnson Controls not only produces car interiors, electrical
systems and other supplies, but has also been undertaking
development in Slovakia, employing 3,300 people so far. It
has five production plants, a technological centre and a
designer studio in Slovakia. The main focus is no longer on
production but on innovation and development.

The new regional centre for sales and administration just
opened in Bratislava will manage production and sales for
Central and Eastern Europe.

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2) Slovakia in Schengen Zone + New Vienna-Bratislava Link

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Slovakia with its super fast growing economy has already
been viewed as a European tiger in recent years. Not
surprisingly property investors are increasingly taking
notice.

And those who haven't yet put their hard earned cash into
the country's thriving property market, may well be persuaded
into action by two upcoming events that will even further
accelerate Slovakia's popularity as a lucrative investment
destination:

1. Slovakia's entry into the Schengen zone (Dec 2007)
2. Euro adoption (set for 1 Jan 2009)

Slovakia in Schengen Zone

From 21 December Slovak citizens will be able to cross the
borders with all neighbouring countries - except Ukraine -
without any checks.

In the biggest enlargement of the current 15-member Schengen
Area, Slovakia, the Czech Republic, Poland, Hungary, Slovenia,
Estonia, Latvia, Lithuania and Malta will join in the Schengen
border-free (and passport-free) zone.

Passport checks between the current 15 member states and the
9 new members will end on 21 December (2007) at land and sea
borders, while checks at airports will end on 30 March 2008.

(Britain, Ireland and Cyprus have chosen to stay out of the
Schengen zone, Bulgaria and Romania have not yet met the
necessary requirements.)

* * *

The highway between Bratislava and Vienna was just opened
a few weeks ago, after the missing miles on the austrian
side were completed at last. The highway cuts the commuting
time between the two capitals down to just over 30 minutes
and is particularly important to the Central European business
community. Property investors are also likely to further
benefit from this increased proximity of the two cities.

(Other connections between Bratislava and Vienna
include the rail as well as a high-speed catamaran service
on the Danube, initiated in 2006.)

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3) Accelerating Property Prices... How Can You Benefit?

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

Continuous price growth
-----------------------

Slovakia, as well as most other emerging markets, have been
attracting international property investors mainly by low
prices and strong and continuous appreciation. And those who
have invested in the country in the last few years, have
indeed been rewarded by the steadily growing property values.

2007 was no exception. Although the year is not yet over,
the growth figures so far are impressive.

According to the country's central bank, the National Bank
of Slovakia (NBS), property prices in the first nine months
of 2007 have increased by 20.8%. The figures include old and
new properties, flats as well as houses.

The most expensive properties are in the capital Bratislava
and the Bratislava region, with average price of 48,245 SKK/m2,
which represents an increase of 18.4% compared to the same
period last year.

Even communist built flats are sold at 40k-55k SKK/m2 in the
capital, and local demand for housing far outstripps the supply,
especially when it comes to modern style property. Accordingly,
Bratislava keeps attracting developers, who are still seeing
most of their projects sold to local home buyers before
completion, in particular in more sought-after locations.

Prices of new flats vary hugely based on area and standards,
starting around 40k SKK/m2 (incl. VAT) on the outskirts and
other less popular locations, averaging 50k-60k SKK/m2 for
most projects in medium areas, up to 80-120k SKK/m2 in most
desirable neighbourhoods. The most expensive projects in
the capital are to be released at the moment at prices of
around 150k SKK/m2.

With rising prices, Slovaks are increasingly seeing their
home purchase as a good investment for the future. However,
the locals' main reasons to purchase a property keep being:
1. buying for own residency
2. parents buying a flat for their child(ren)

Traditionally Slovaks have always liked to purchase a home
for their offspring to live after finishing studies. This
tendency is much stronger in Slovakia than in Western Europe
or US, where the population is more mobile and it's less clear
where the children may live in a few years time.

So, where in Slovakia are property prices at their lowest?

The cheapest properties can be found in the Nitra region,
averaging just 14,676 SKK/m2 (which already includes a 28.8%
y/y growth). Despite Nitra's position in the wealthier western
Slovakia and its low unemployment, the city's housing market
has long been lagging behind due to a strong supply and low
demand for property. The very low property prices (of old
communist built housing) are also the reason Nitra is one
of the towns with the lowest building activity in recent
years. The market is simply not viable for developers, due
to low sales prices and hence non existent margins.

The lowest price increase in the nine months of this year
has been seen in Trnava, in spite of its strong economy and
massive automotive investments creating thousands of new jobs.
Prices have increased by 9.6% y/y. The at the moment slower
developing Trnava market is also the reason for the currently
low development activity in town. The vast majority of housing
remains of communist construction (flats) as well as older
family houses.

The Zilina region has experienced the highest growth in the
nine months of 2007, with average prices rising from 14,920
to 20,279 SKK/m2 (35.9%). While the low prices are due to
mainly communist estate housing present in Zilina, the fast
growing numbers of new projects could potentially reach the
limits of the local purchasing power, with most developments
being offered at 35k-45k SKK/m2 (incl. VAT) - a bargain for
Bratislava but not cheap for Zilina or any other Slovak town.

At the moment we see the capital Bratislava as offering the
most advantages to investors, especially those looking to
buy to let. The city provides an excellent combination of
thriving local property market, high purchasing power, demand
outstripping supply by a wide margin, shortage of stock, as
well as resulting strong capital appreciation expected to last
for the next few years.

The capital also has the added advantage of a more viable
rental market than any other Slovak city (mainly due to
large numbers of international companies and expats, as well
as a strong student and migrant population).

Holiday resort properties are also experiencing a boom in
Slovakia at the moment, and when bought at the right price
and with realistic expectations can prove a very lucrative
investment. But more on this segment in the next newsletter
issue.

Currency appreciation
----------------------

Those who have bought (or are buying) a property in Slovakia
will not only profit from rising values, but also from the
strongly appreciating Slovak koruna.

After a few years of solid appreciation, the koruna recently
hit a new all-time high against the euro trading at close to
32.7 SKK/EUR.

Currently the rates stand at approx 33 SKK/EUR, 46 SKK/GBP and
22.5 SKK/USD (compared to close to 40 SKK/EUR and 60 SKK/GBP
just a few years ago).

Slovakia has just completed the required two years in the
EU's ERMII exchange rate mechanism. The central bank (NBS)
expanded the floating range down to 30.3 SKK/EUR, which may
be closer to the rate at the time Slovakia joins the euro.

There is a wide expectation of further koruna strengthening
before the single currency adoption in January 2009, which
is good news for all investors holding a Slovak property.

* * *

If you haven't yet taken part in the booming Bratislava
market, or wish to expand your portfolio, we have numerous
investment opportunities for you (residential and commercial).

Some of the most popular among investors are classic pre-
war apartments in the lucrative and sought-after city centre
(Old Town district). With the best rental demand and highest
shortage of stock these properties have been benefiting from
very strong appreciation in the last few years. Classic
flats (renovated or not) range from under 50k GBP for smallest
units or from around 70k GBP for 1 bedroom flats and from
100k GBP for 2 beds. Prices depend on m2 size and quality,
and very large top apartments can reach close to 500k GBP
(although this is an exception).

We also have an exclusive range of new built (off-plan)
units just steps from the city centre, at extremely good
values, with large 2 bed units from 126k GBP (including VAT).

Due to the fantastic central location the rental demand is
to be excellent and yields of 6-7% are expected. Only a
handful of these high quality units is available so don't
wait and contact us now to receive full details!

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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

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Copyright 2004-2007, Slovakia Investment Property
All rights reserved

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

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

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

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?

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

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

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

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
-------

Interested in high quality, high yielding properties at
bargain prices in Europe's largest economy's most exciting
cities? A large selection of apartments, apartment blocks,
as well as commercial properties are available in Berlin,
Dresden, Leipzig and other German cities.

Email us your requirements at info@alphare.net.
Alternatively, to learn more about the fantastic advantages
of the German property market, have a look at our main site
www.alphare.net.

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4) Tell Us What You Think!

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

Just e-mail us at: contact@slovakiainvestmentproperty.com

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

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