City bonuses drive investment in central Eastern European property

As London and the South-East’s property markets gear themselves for a city bonus driven boost, there is an emerging trend which highlights investors’ willingness to avoid London’s competitive markets and look to Central and Eastern Europe as alternative investment locations.

In a survey of visitors to propertysecrets.net a majority of 31.8% were based in the south east of England followed by overseas browsers (11.5%) and visitors from the midlands (11%). This number of south eastern visitors has increased significantly in recent months, as has the amount these investors are willing to spend. In the most recent survey, 57% expressed an interest in investing abroad and are willing to spend £50k+ on an investment property – the maximum amount on the survey.

Property Secrets CEO Neil Lewis comments; “These figures complement the increased number of inquiries we are receiving from south east investors, many of which are expecting sizable bonuses this year and are planning how to spend this windfall.

“The feedback we’re getting from these investors is that Central Eastern Europe (CEE) states are their key investment markets. As these bonus recipients are in particular targeting Poland, Czech and Romania we have consequently increased the numbers of investment opportunities in these countries to match the level of demand. Rather than buying one or two units, they are looking to make a significant investment.

“Many of these investors have traditionally stayed loyal to buying in London but are casting their eye further a field in response to London’s hugely competitive property market. Smart investors are looking abroad to avoid vying with fellow bonus recipients in local markets and gain a share of the high rates of returns CEE’s markets have to offer.”

Countries such as Poland, Romania and Czech Republic are becoming investment locations of choice for many UK residents and rightly so. The GDP in all three economies is growing at over 5%; each country is receiving high levels of FDI and offer rapidly improving finance options. The Czech Republic is a prime example.

Lewis continues; “The potential of the Czech Republic’s property market is founded upon a growing economy, high levels of FDI and wage growth. A significant development that will alert investors is the changing VAT laws. From the start of 2008, the VAT rate will increase by 14% so providing incentive for investors to purchase a property before this date.”

Property Secrets’ investors have recently recorded rates of return of over 300% in developments in Poland, Czech and Romania – quite an incentive for the recipients of the £19bn bonus who have the means to invest in several units. Its top 5 cities for forecasted growth are:

City Property Secrets Forecasted Growth
Bucharest 30%
Riga 25 – 30%
Prague 20%
Lodz 20%
Warsaw 15 – 20%

Lewis concludes that UK property will as ever receive high levels of investment from city workers but believes a balanced investment strategy will deliver the highest rate of returns; “In reality, both the UK and CEE markets still offer investment potential and for the city high-fliers, the pragmatic investors will spend their bonus investing in both the UK and CEE – so balancing the risk and the gains whilst getting one over on their colleagues.”

For further information, visit propertysecrets.net.