News: Eastern Europes border boost

Mon, 24 Sep 07

Four Eastern European nations are likely to see rapid growth in property prices following entry into the Schengen zone on 1 January, 2008...

The Schengen area constitutes a border-free travel zone within the EU among the old member states, with the exception of Great Britain and Ireland. Non-EU countries, such as Norway, Iceland and Switzerland are also included in the Schengen zone.

In August it was announced that the first four Eastern European nations will be joining the Schengen zone from the start of next year – Lithuania, Poland, the Czech Republic and Slovakia - meaning that it will be no longer necessary to wait at the border of each country in order to present documents and undergo customs inspections.

Highly beneficial effect

Although this is likely to have little effect upon property prices upon property prices across much of the four new entry countries, Propertastic! believes that it should have a highly beneficial effect upon the prices in Bratislava due to the city’s close proximity to the Austrian capital of Vienna.

Although the city centres of Bratislava and Vienna are only 35 miles (56km) apart, there is a huge difference in property prices between the two capitals, with prime city centre property in Vienna currently fetching EUR3500 per square metre compared with only EUR1750 in Bratislava.

Propertastic! Chief, Nick Pendrell, comments, “I just can’t believe that the huge disparity between real estate prices in the two capitals is going to last forever. Sooner or later, prices in Bratislava are going to start catching up with Vienna (which looks far from overpriced itself and is showing steady growth).

Once it gets more easy to commute from Bratislava to Vienna, more Slovaks are going to start working there earning a much higher salary than they would be able to do so in Bratislava, and they will start using that money to start buying more desirable apartments back home.”

Great future prospects

“Even without entering the Schengen zone, Bratislava’s prospects were looking great already, with Slovakia’s low taxes attracting a lot of inward investment into the country such as Kia, leading the country to be dubbed ‘the Tatran Tiger’.

Add to this the fact that prices are still among the cheapest in Europe while rental yields are among the highest and that Slovakia is currently on schedule to adopt the Euro in 2009 and it’s hard to find a single negative about the city.”

After lagging behind other fast-moving property markets in eastern European capitals such as Riga, Tallinn and Warsaw, which all saw growth of up to 60% in 2006, Bratislava is now starting to catch up fast, with The Slovak Spectator reporting that prices increased by 20% in the first half of 2007.

“Currently it appears as if few people are talking about the opportunities presented by Slovakia’s entry into the Schengen zone, but this situation will not last for long,” Pendrell continued. “Luxury properties on the west side of the Danube which have the easiest access to Vienna are likely to be the main beneficiaries of the new open-border area.”

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