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Off Plan Investment Property in Slovakia

In the past 18 months, Slovakia has experienced a high interest of foreign buy-to-let buyers of residential apartments in Bratislava and other major cities.

Those, who got into the market early have made a good use of the opportunity to cash in on the high capital growth, rising prices and rising rents. The interest of small investors has been attracted by the advantages of a transparent market, a high domestic demand and the exceptional growth of economy. Slovakia’s residential real estate market is so significant because of the unique combination of its parameters: prices still reasonable, low risk, high transparency and relative predictability of the market.

The real estate market in Slovakia reached the average annual growth in value of residential properties on the level of 15 % in several consecutive years. This remarkable growth is being pushed by a high domestic demand and persisting lack of quality apartments caused by the drop in construction in the 1990s. The domestic demand was strengthening early in this decade, following the rise in foreign direct investment flowing into the country.

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The prices of apartments grew most significantly in 2004 and 2005, when prices of all categories of properties were rising in urban areas of Bratislava, Trnava and other major cities, mostly due to internal migration and lack of properties on the market. By 2005, more new-built properties entered the market, giving buyers a much more desirable alternative to old concrete bloc apartments. Growing competition in this field put the pressure to increase the quality of new housing. Developers opted for a higher quality rather than lower prices to attract the attention of potential customers. This pattern was persistent on the market over 2006 and 2007, when the first high end and luxurious developments were released in Bratislava as a result of the rising quality awareness of buyers. The interest of foreign investors is gradually increasing; however, the domestic demand will remain a dominant factor on the market in near future.

Practical advice to foreign buyers
• Opt for high standard or luxurious properties if you can. Follow the preferences of middle and higher classes on the domestic market. You will be dealing with Slovaks when renting your property out or reselling it.

• Purchase a parking space or a garage. There is a general lack of parking in city centres and their immediate neighbourhood. Without a parking facility you might face difficulties renting your property out.

• Check references of the developer. Ask your estate agent to provide you with photos and addresses of the developer’s past projects to give you an idea of the quality of construction and interior finish.

• Ask your estate agent about the proportion of domestic buyers within the development. High ratio signals that the price is right for this type of property, the capital growth potential is interesting and the chances to rent it our is really high.

• Check the availability of property management services. In an ideal case, the developer also has a property management company and an estate agency.

• VIEW THE SITE! The visuals of a future development might look beautiful but make sure they are true to reality. Use your viewing trip to sign the Power of Attorney for your selected solicitor and save money for the verification process.

By Otília Šimková
Photo: iStockPhoto