Emerging markets investment

Europe Expands
Ten new countries joined the EU in 2004 - Southern Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia - bringing the current membership to 25 states, and increasing the population to circa 457 Million.

 

Growth Expectations
The UK has seen 11.1% compound growth (source: HBOS) over the past 10 years, Ireland has seen 14.9% in the same time frame (source: myhome.ie).

To put this in context, if you had invested the equivalent of €20,000 in a buy to let property valued at €100,000 in 1995, your initial investment (€20,000) would have be worth €321,000 in 2005.

Within the new member states, Advantage Portfolio believes that The Czech Republic, Poland, Slovakia and Southern Cyprus currently offer the best best prospect for such returns but also the lowest risk, and vitally, the clearest exit strategy for buy to let investments.

The evidence and sustainable drivers for a repeat of this incredible growth is laid out in this website.

The "buy to let boom clock" started ticking in May 2004 when these countries joined the EU. Today, each represents an outstanding investment opportunity with the realistic prospect of 5-7 years of 15%+ growth for overseas investors. And the opportunity for upside is outstanding.

Investing in these locations is not difficult, but is time consuming for the un-initiated and full of traps for the un-wary.

For a high level overview of the entire process of purchasing investment properties in the emerging markets of Central and Eastern Europe follow these links:

• Location, Location Location - why reward and risk are not linked
  
• The Right Property - why you should avoid high-end ex-pat apartments
  
• The Purchasing Process - how we look after you as you invest
  
• Financing your purchase - gearing for maximum returns
  
• Rental and Property Management - a fully hands-off service

The reasons for investing in the Emerging markets of the new EU are multiple:

• Most of these countries have had slow, suppressed economies due to decades of communist influence and a lack of access to international free trade.
• Their strategic location at the heart of Europe makes them perfectly positioned for access to other European, as well as Ukrainian, Russian and other eastern markets.
• Due to their recent EU accession and the resulting massive increase in foreign direct investment (FDI) these economies are now increasingly dynamic and vibrant - and growing fast.
• Property ownership by foreigners was previously difficult or even impossible, EU membership now offers legal security for property investors looking for stellar growth rates.
• Finance is just becoming available, and affordable, to the booming middle classes - this is creating huge demand for new builds and yet beurocracy and slow speed of land transfer means there will be a huge shortfall of suitable properties for years to come.
• Joining the Euro will further boost affordability as local banks give way to the major players of Europe who are able to offer even better finance deals.

Long-Term Growth
Per capita income in these countries is as low as 36 per cent of the EU average. When you combine the advantages of this low-cost (yet highly skilled) work force with significant EU fiscal incentives, it is easy to see why FDI is pouring into these countries.

Global enterprises such as IBM, HP, DHL, Microsoft and Peugeot-Citreon have already established strategic presences in the region. Many others are following, having found the location and language-barriers of markets in the Far East and India highly problematic.

Poland has a strong and rapidly growing economy, and with relatively inexpensive mortgages readily available from many commercial banks, Poland’s residential property market is entering a boom phase.

Similarly, The Czech Republic is rapidly growing and has captured a large share of service industries (such as call centres), while Slovakia has become the largest manufacturer of cars per capita in the world since joining the EU.

Wages are targeted to converge with those of Western Europe within ten to 15 years – taking residential property prices with them. Average residential property values are, in some cases, 75 per cent less than the values of western EU countries.

For property owners in these countries, the drivers are there for sustainable long-term capital growth that will significantly outperform the mature markets of the United Kingdom and Western Europe.

Historical Proof
Just as the UK and Ireland benefited from many years of economic growth after EU membership, these growth and wealth-creation factors will remain in place for some years to come for the Czech Republic, Slovakia and Poland.

Incentives for FDI into these countries will remain until they reach the EU target for GDP per capita of 75 per cent of the level of the original 15 western EU states, which will take in excess of 10 years for these countries.

Meanwhile, Southern Cyprus is more akin to Spain, but without the issue of over-development and quesions over land ownership.

Register today to recieve further news and advice on these markets.

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