At the time of the ‘Velvet Divorce’, when Slovakia and the Czech Republic parted company from the country formerly known as Czechoslovakia on 31 December 1992, many economic observers wrote off Slovakia, predicting that it would soon drop out of the Premier Division of the new Central European countries. 

Certainly, on paper, it seems as if it had little to offer the world compared to its ‘big brother’ of the Czech Republic, suffering from a reliance upon the old industries such as steel and little of interest in terms of exports.  Bratislava’s location could not rival that of Prague and the city was never going to be the same draw for tourists.

In the first few years following the country’s separation, it certainly started to lag behind the major new countries in the region (Poland, the Czech Republic and Hungary) in terms of growth.   However, in more recent years, Slovakia has surprised many in terms of how well it’s got its act together and, since 2002, it has showed consistently high growth levels, showing the largest growth in GDP in the EU behind the three Baltic States.   Economically, Slovakia seems to have learned quite a lot from the success of the Baltic States, most notable of which is the country’s low flat-rate tax regime which now makes the country very attractive to foreign investors.  This bore fruit in a big way when the car manufacturer, Kia, chose Slovakia as its base for car production in the face of heavy competition from the country’s neighbours.  Since then, foreign investment into the country has increased rapidly.

Despite this very exciting economic outlook for the country, it seems as if property investors have failed to see this to date.  Last year’s growth in property prices were 15% , similar to the growth across most of the region – hardly stellar.  The result is that property prices in Bratislava are currently the lowest of all of the countries that joined the EU in 2004.

OK, so the mortgage products have never been that great in Slovakia, but that still doesn’t stop Bratislava’s property prices seeming to be highly undervalued at this point – nearly 50% lower than prices in Riga and Vilnius, for example, which seem to have a similar economic game plan.

Frank Knight are predicting that Slovakia will see a 12.5% increase in property prices during 2007, putting it in joint 5th place in Europe along with seven other countries – so that’s pretty good growth but, again, not exactly stellar.  We believe, however, that Bratislava has even greater potential than that.  If we were to stick our necks out, we would actually make it our top tip for 2007, with the possible exceptions of Sofia and Podgorica.

Slovakia’s forward thinking economic policies and the fact that property prices seem comparatively very low at the moment aren’t the only reasons for our optimism, however.  There are other reasons too.  One is that there currently is not so much new development going on in Bratislava compared to cities such as Prague and Warsaw, so demand for quality housing should exceed supply for a while to come, especially if there are better terms for mortgages to come (and there’s no reason why they shouldn’t improve soon to bring them into line with the rest of Eastern Europe).

A second factor that makes Bratislava look so promising is its proximity to Vienna.  No two European capitals are as close to one another as Bratislava and Vienna (well, excluding Rome and the Vatican City).  Just 56km separate the two cities.  There can be few places where the difference between prices in Old Europe and New Europe are so pronounced, with Vienna being one of the more expensive countries in Europe, whereas Bratislava is one of the cheapest.

We can’t believe that this situation is going to last much longer. On 1 January, 2008, the border controls between Slovakia and Austria are going to be removed, which will make it a very easy commute between the two cities.  When this happens, it seems inevitable to us that many Slovaks are going to start commuting to work from Bratislava to Vienna, earning much larger salaries in the process.  Conversely it is likely that many Austrian who can’t get on the property ladder in Vienna are going to be looking at buying property in Bratislava instead.  Both of these factors should lead to a massive rise in property prices in Bratislava.

To sum up, Bratislava looks like an excellent opportunity right now, with great returns to be made in the short, medium and long-term.  Get it while it’s hot!

Additional Background Information

Key Economic Data      Slovak Climate      Visitors' Guide

The above contains our thoughts on the current state of the market.  But, like any type of investment, there are no guarantees as prices are always influenced by a huge number of different variables.

You can keep abreast of developments in the market by checking out the articles in our News section where we’ve trawled the Internet for every story connected with property in Slovakia so you don’t have to.  By checking the news reports regularly and thinking through the consequences of each piece of news, you should be able to get a good idea as to how quickly or slowly property prices in the market are going to rise in the near future.

The information in this section only tells half the story, however as only a small proportion of Slovak property news is translated in English, which means that the locals are getting a lot more useful information than foreigners are.

Investing in the wrong markets could make the difference between making tens of thousands and losing tens of thousands over the next few years.  If you’re seriously considering investing in Slovakia, then you should think of subscribing to our Premium Service so that you can get all the breaking news from the market at the same time the Slovaks are hearing it.

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