Tatra Tiger Burning Bright
- The Financial Times (London) has an article about Slovakia as "Detroit
of the East" today (2/20). I'm posting passages from another article
about Slovakia that the Financial Times carried on Friday (I
recalculated the koruny/crowns and square meters in the original article).
votruba "at" pitt "dot" edu
x x x
TATRA TIGER, BURNING BRIGHT
The Financial Times, 2/17, 2007, by Robert Aderson and Enid Tsui
In 20 years, Slovakia has moved from communist backwater to regional
economic powerhouse and transformed its property market. [...]
Following a change of government in 1998 and accession to the European
Union in 2004, Slovakia now styles itself as the "Tatra Tiger". Bold
free market reforms have helped draw in foreign investment,
particularly into the car industry, and generated the fastest economic
growth in central Europe. There are now direct flights into
Bratislava from London and other west European cities and a new
motorway connecting the city to Vienna, 40 miles away, is due to be
completed at the end of the year.
Foreign developers [...] are erecting luxury apartment towers,
targeting not only locals but also Austrians, Americans, Britons and
the Irish. And, even further afield, adventurous second-home buyers
have begun to explore the country's mountain- and lake-side villages.
"The story is very positive," says Gary Moore, who bought an apartment
in a new building east of Bratislava's center last year. "The
macro-economic and tax environment, the proximity of unaffordable
Vienna and the completion of the motorway all add up to a one-way bet."
As one of the smallest capitals in Europe, with a population close to
500,000, Bratislava has long been overshadowed by more glamorous
central European destinations, such as Prague and Budapest. It's true
that the legacy of 40 years of communism is still apparent; the
pre-fabricated high-rises of Petrazalka, one of the biggest housing
estates in Europe, continue to cast a shadow over the city's southern
side. But there are charming parts, too, including a pedestrianized
baroque old town where apartments tend to be snapped up the moment
they're put on the market. Specialist companies, such as Slovak
Renovation, are now cropping up to cater for the new buyers interested
in historic buildings.
"A lot of people want to buy in the old town instead of new
developments but there was no structure to help them with the ins and
outs, the language barrier, the bureaucracy and builders," says Slovak
Renovation director Jim Passmore. "Our clients are mainly
English-speaking expatriates on site in Slovakia, who can see the
potential and energy and growth that's going on here, or people who
want are buying for an investment or to have a holiday home near
mountains and lakes and lots of natural beauty."
One of the company's recent projects involved restoring an apartment
in an 1890s building in Bratislava's old embassy district, which had a
beautiful facade "with cherubs and everything else" but was "a
complete building site" inside with broken windows, bare wires and
concrete floors. "Now it's a marble-accented luxury apartment with
state-of-the art kitchen," Passmore says.
The city's new developments are concentrated outside the center,
mainly along the Danube. Two thousand apartments were built in the
first six months of last year and half were sold before completion.
The most talked-about scheme [...] will occupy a 35-acre site and
include 250 high-end apartments, expected to break through
Bratislava's current price ceiling [...].
This would put them well out of reach of most locals, who earn an
average of just $950 per month, and some agents [...] worry that the
city's "big boom" has passed.
But Laurie Farmer, the British head of Home Direct Europe and the
doyen of Bratislava real estate, thinks there will be enough demand
from foreigners to sustain further growth. Prices [...] are now at
Prague levels [...]. Patrick Loftus, founder of the Slovak Real
Estate agency, says he's confident that Bratislava will be "very hot"
in five years' time.
Moore paid about $145,000 several years ago for his 645 sq ft
apartment, which is now being rented by a professional on assignment
in Bratislava for $800 a month. Apartments in the desirable Nove
Mesto area start at $115,000, while large villas in exclusive Stare
Mesto might go for $615,000.
Outside the capital, in the countryside and mountains, prices are even
more reasonable. Australian Adam Lincoln and Briton Kevin Sanders
recently paid about $61,500 for a 250-year-old, 4,850 sq ft house just
outside an old mining town in Banska Stiavnica, a Unesco world
heritage site in central Slovakia. Built next to a gold and silver
mine that's now defunct, it also incorporates an old forge. "We were
after something historic, a house that has an established role in the
local community," Lincoln explains.
The pair have hunted down the first house plans in the town's archives
and want to restore it as closely as possible to the original look.
They have imported 7 tonnes of 19th century Viennese floor bricks
purchased on eBay and expect to spend about $155,000 on the project.
Other attractive areas include those close to ski resorts, such as
Ruzomberok in the central Velka Fatra range, Jasna in the Low Tatras,
Poprad in the High Tatras and Liptovsky Mikulas in the Western Tatras.
Apartments in Ruzomberok with lake views are on the market for about
Fields says that 20 of her mainly British clients bought second homes
around Slovakia last year, up from nine in 2005, and only two decided
on "more cosmopolitan" Bratislava. "They're looking for a more
easy-going life, for smaller towns with local co-ops and local food,
and for rural areas with larger towns nearby and easy access to the
Banska Stiavnica, for example, has "lots of lakes and picturesque
castles" but is only an hour and a half by car from the capital.
Except for small branches of Tesco, the UK-based grocery chain, "we
don't have high-street shops outside Bratislava," she adds. "Some
clients say to me that it looks like the 1950s. They like the slow
pace, the old ladies going in and out of church. You don't often see
that these days."
Passmore says his clients are also getting more adventurous. One, from
the UK, is buying a big house close to Jasna to split into three
apartments with a spa, while another, from The Netherlands, plans to
remodel a derelict chateau.
Lincoln, Sanders and Moore all say they were surprised by how
accessible the Slovak property market is. Restrictions on foreign
ownership were scrapped when the country joined the EU and entries to
the land registry -- once a cause of nail-biting waits -- now take
just a few weeks. There is no property transfer tax and mortgage
rates -- at under 5% interest -- are now more easily available.