Location, Location, Location

If you have made the decision to invest in property, your next task is to decide where to invest for the best returns.

Central and Eastern Europe clearly offer good returns, but were you aware they also offer very low risk and a clear exit route?

High Growth
Post EU-accession macroeconomic factors indicate that this market is set for sustained capital growth over the next ten years:

• GDP growth at three times the western EU average, and massive EU-driven foreign direct investment
• Microsoft, IBM, HP, DHL have all already invested in strategic regional centres
• Financing is readily available, meaning low initial down payments and gearing
• Returns of 300 per cent or more are possible over a five-year period
• Wages are 36 per cent of the EU average and are targeted to converge with the EU average in ten years; it’s logical, therefore, that so will property prices, which are currently 25 per cent of the western EU average
• Currently a capital-city apartment costs as little as £31,000
• Property prices are currently rising by 12 to 20 per cent per annum across the region

Low Risk
The following factors reduce the risk of investing significantly:

• Adoption of EU-wide property ownership laws
• EU membership security
• Escrow or bank guarantees are easily accessible, securing your funds if anything goes wrong
• Mortgage financing for foreign owners is now well established
• Large local rental market of emerging middle-class tenants
• Local buyers are abandoning the Soviet-style concrete blocks for the modern apartment developments of the type you will be investing in, while forward-thinking and futuristic city regeneration plans are driving migration to the major cities

Exit Strategy
In Poland, the Czech Republic and Slovakia, property ownership is a new and growing phenomenon for locals, due to readily available mortgage finance and increasing wealth.

This can only mean increasing local owner-occupier demand for when you want to sell up and realise your investment. Locals are already buying 70 to 80 of all off-plan properties on our chosen developments for their own use.

Contrast this with current ‘hot spot’ locations, such as Dubai and Bulgaria, where almost 100 per cent of new off-plan property is being sold to overseas investors. This scenario creates the very strong possibility of plummeting prices with no-one to sell on to when investor sentiment changes, as it inevitably will when the next property hot spot is uncovered.

Invest Now!
The time is right for investment right now to benefit from the future growth in these countries:

• VAT on new property is set to rise from five per cent to 19 per cent in the Czech Republic and Poland in 2008; this will drive up resale values of properties purchased before this date
• FDI has increased due to recent EU accession. These countries are attracting the lion's share of new FDI resulting from recent EU accession
• Increasing wealth is driving huge growth in middle-class home owners and potential tenants; this means continued growth in demand for property
• Well-above-average GDP growth
• Property ownership is a new and emerging phenomenon due to readily available mortgage finance, meaning ever-increasing demand for when you want to sell your property
• Restrictions for foreign ownership are still in place in some countries but can easily be overcome - this creates an opportunity for intrepid investors
• Differential treatment of foreigners is disappearing, and local financing is becoming readily available for foreigners
• Locals want to leave Soviet-era high-rise blocks to live in modern apartment developments

Advantage Portfolio view property investment as a calculated business decision as opposed to an emotional reflex. We are here to help you to achieve an outstanding return on your investment through a clearly defined simple formula.

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