Bratislava is the new Prague, and Irish people would love it if they knew where it was, says Derek Scally. Many who do are investing in apartments costing from around €35,000 that offer decent returns
Bratislava is everything Prague isn't. While the Czech capital's city centre is a noisy, dynamic and dirty place, the Slovak capital is a quiet, clean, pleasant city.
The 1993 dissolution of Czechoslovakia left Bratislava somewhat in the shadow of its larger brother to the north. But in hindsight, that may not have been a bad thing, considering present-day Prague's souvenir shop scars of mass tourism.
The flourishing city on the Danube, long an insider tip, is finally emerging on the radar of tourists and investors alike. The property market here is smaller than in other central European cities like Budapest or Warsaw, but rising prices and a decent supply of new developments mean it's a good time to get on board.
The Irish are the largest foreign investors in Bratislava, mostly due to the presence of Ballymore Properties, Sean Mulryan's development company. which is the driving force behind Eurovea, which it calls central Europe's largest mixed-use riverside development. The ambitious scheme will essentially give Bratislava an entirely new urban district - and a main shopping street the city lacks - with over 200,000 sq m (2.15m sq ft) of office, retail and apartment space.
However the interest from Irish private investors in the residential market has been modest though agents say things have picked up significantly since the start of the year.
"A lot of that is down to Irish ignorance. Lots of people don't know where Bratislava or even Slovakia is. They confuse it with Slovenia," says Billy Norton, founder of the Norco property agency. "But a lot of interest has moved down from Prague because property prices there have risen so much."
Slovakia has a population of five million and is sandwiched in central Europe with five borders to the Czech Republic, Austria, Hungary and Ukraine. Bratislava, once the capital of the Ottoman Empire, has a population of 450,000 and is 30 miles, or an hour on the train, from Vienna - closer than Navan to Dublin. By the time the long-awaited intercity motorway opens in 2007, the commuting time for motorists will drop to just 40 minutes.
There are no direct flights from Dublin but the city is served by low-cost airlines Easyjet and Slovakia's own SkyEurope.
Slovakia spent much of the 1990s in political isolation thanks to the despotic prime minister Vladimir Meciar, whose openly corrupt privatisation drive and regular nationalistic outbursts alienated EU, NATO and the US. But the present centre-right government of Prime Minister Mikulá Dzurinda has pushed through necessary, if unpopular reforms, and last year lead the country into NATO and the EU.
Slovakia has had a strong economic performance of late, with 5.5 per cent growth last year and forecast 5.8 per cent growth this year.
Slovaks are among the lowest paid people in Europe with an average monthly income of around €500 a month. But the arrival of large multinationals in Bratislava has brought with it a growing expat community.
"The rental market is very strong. All the properties we manage are fully rented and we deal with a circle of businesses which are looking to rent all the time," says Norton. "At the moment we are getting investors 8 per cent yield, sometimes 9 per cent." Properties sell within days of coming on the market in Bratislava.
Apartments on Norco's books at the moment include a 34 sq m (365 sq ft) apartment for SKK1,300,000 (€35,000) up to a 100 sq m (1m sq ft) apartment for SKK 4 million (€104,000).
Norco concentrates on apartments in the so-called "golden triangle" of the old town, saying that newer developments further out are less attractive.
But Mayoman Pat Loftus, founder of the Slovak Real Estate Agency, is of another opinion.
"Everyone wants to buy in the old town and there is a premium already. It's not impossible but it's a lot of work to find something reasonable at a reasonable price," he says. "Of course it's a trophy, but it's like Ireland where people didn't make less money by investing in the suburbs rather than in Temple Bar."
Until recently Bratislava suffered from a shortage of apartments and developers were selling apartments from the plans by word of mouth. New developments have changed the market so that it's easier to find an apartment; however the days of 20 per cent annual property appreciation are also in the past.
There's no stamp duty in Slovakia and apart from lawyer's fee of around €500, there are no hidden charges, says Loftus. Still, he says Bratislava is not necessarily the best place for first-time investors or investors looking for a quick return.
"The people buying at the moment are more educated investors; 80-90 per cent are accountants or bank managers. For someone without a second property in Ireland it's too much of a jump," he says. "I wouldn't pay too much attention to talk of yields either. Capital appreciation would make me more excited than the rental returns. If the rent comes close to meeting interest you should be happy."
Loftus is currently selling apartments in Axton, a new development due for completion in October in the Ruzinov area close to the old town.
The development offers one- and two-bedroom apartments from 60-80 sq m (645-861 sq ft), with prices starting at €93,000 and €105,000 respectively. The apartments have a good quality finish including a tiled bathroom and video security phones but no fitted kitchen.
The company website offers an excellent interface allowing browsers to explore the development floor by floor, apartment by apartment.
The development is located next to a new business park with a large number of foreign companies.
"I would be aiming to rent these apartments out to expats, as well as Slovak bank managers and company directors for anything from €400 to €600 a month," says Loftus, who is currently negotiating exclusive deals on other new developments.
Irish agents say that when it comes to investing, cash is king in Bratislava, but special foreign investor mortgages with 4.5 per cent interest rates are available from banks such as Bank Austria-owned HVB.
WEBSITES
www.slovakrealestate.sk
www.properties.sk
www.hvb-bank.sk
www.slovakspectator.sk
