Investors keen to repeat their buy-to-let successes are looking to the former communist bloc. Patrick Collinson marks the card for would-be buyers

Saturday May 1, 2004
The Guardian

The insatiable British property boom is spreading along the Danube to the shores of the Black Sea with thousands of bargain hunters from the UK snapping up cheap flats, houses and country estates.

Investors made rich from buy-to-let schemes in Britain are now heading to eastern Europe in the hope that the accession into the EU of countries such as Hungary, Poland, Slovakia and Slovenia will spark rapid property price rises.

One new hotspot is expected to be Bratislava in Slovakia, which is only 40 miles from Vienna in Austria. Now that Slovakia has joined the EU, investors are expecting a sharp rise in commuters travelling to work in Vienna, pushing up earnings which will feed property prices in Bratislava.

Prices in the Slovakian capital begin at around £30,000 for older flats, while houses in the Slovakian countryside can be as little as £15,000.

But Jobs & Money found that prices in other EU accession countries have already risen sharply, with few bargains around. Prague, one of Europe's beautiful cities, has seen prices soar, and apartments in the centre start from around £125,000. It's the same story in Budapest and Ljubijana, where prices can easily match those in Western Europe.

This week will see the launch of a new property fund aimed at UK investors willing to stump up £15,000 to invest in buy-to-lets in Poland and Bulgaria. Bulgaria is not one of the countries joining the EU today, but its Black Sea coast is attracting intense interest. 

One beach and golf development on the "Costa del Bulgaria", with new apartments at £35,000, recently sold out to Irish investors after an exhibition in Dublin. Buyers have been attracted by the low cost of living, with a typical three-course meal with wine costing just £3.

James Hughes of City Trading Post, which is launching the Euro Property Prospects fund, says around 30% will invested in Bulgaria. "We think Bulgaria and Poland offer the best prospects for property growth, but it won't be a smooth ride."

Anyone investing in Eastern European property should understand that it carries high risks. Legal systems are far from robust, there are few codes of conduct, and government officials have rarely dealt with foreigners. Title deeds are often disputed and need to be comprehensively checked.

In many countries you need official permission to buy, and may have to set up a company to make the purchase. Its directors must include at least one local citizen.

But Mr Hughes adds: "What's more risky: buying a property in Britain where the market is already highly valued, or investing in a portfolio of properties spread over a basket of European countries?"