Location, location
Property investors interested in Eastern Europe are looking beyond the cities and off to the countryside for bargains. Words by Oliver Bennett
THESE DAYS, MANY PEOPLE are property investors – but few would go as far as Scott Alexander, the 31-year-old British millionaire who bought a whole coastal town in Bulgaria in 2006, and then renamed the “difficult to pronounce” city after himself.
It’s an extreme example of the current interest in central and eastern European property. For Alexander is not alone – apart, perhaps, from the sheer scale of his enterprise – and the region is full of people looking for property bargains away from overheated western Europe.
Most of these investors have flocked to the bigger cities, on the reasonable assumption that the best rental yields lie in business apartments. Others have gone to the coast, particularly Bulgaria: according to Nick Barnes of UK agents Knight Frank, the two key groups of buyers are those looking at leisure properties and those looking for urban buy-to-lets. But the countries that make up the region offer a vast range of properties, some of which are in the continent’s loveliest quarters. From deep rural peace to soaring mountain bothies and apartments by azure seas – look to the East.
OUT IN THE COUNTRY
The rural villages of eastern Europe very often have considerable charm, and although they haven’t been the focus of the recent property rush, that might change. As Tim Hill, operations director of leading Polish property portal Mamdom, notes, the Poles are returning to Poland: “And they want to build their own houses, very often in the country, rather than the inner city.” There are even palaces and historic homes available, but as with other emerging markets, do take advice if buying in deep rural areas: “If it is designated as farmland, it may mean that there are restrictions for foreign ownership,” points out Hill.
In Romania, subject of a great deal of property investment at the moment, country homes are gaining a degree of interest. “A modest, rural three-bedroom house can be bought for around L25,000,” says David Cox of Property Frontiers. “As tourism in the country increases and the holiday market establishes itself, Romania’s potential should open up.” Indeed, as with Poland, there is a small but emerging cognoscenti market in old properties, particularly in the Romanian conacs – aristocratic Romanian homes dating back to before the Communist era. These often need repair, but they have charm, and they’re cheap: you may well find one between €20,000 and €100,000. So, where to find the perfect conac? Well, historic Timisoara is close to the border with Serbia and surrounded by the lovely countryside of the Banat region; then, there’s Romania’s best-known area, Transylvania, which already has a significant tourism industry on the back of its most famous resident, Count Dracula. It is a region of great beauty, with forests, castles and the Carpathian Mountains. Here, holiday cottage investments have great potential: however, buyers should be aware that it is a short season and that there are restrictions on foreign freehold ownership of land, although these are expected to relax now that Romania is an EU member.
BESIDE THE SEASIDE
The chief seaside destination in eastern Europe is Bulgaria, and there has been a bit of a gold rush to the country’s Black Sea Riviera in the last few years. Figures from the Bulgarian National Bank (BNB) show that numbers of foreign buyers rose by 63% in the first quarter of 2007, compared to the same period a year before. However, some warn that the Bulgarian coast may now have peaked and over-extended itself. “It’s an emerged, rather than emergent, market,” says Cox. “In some areas, prices have soared way beyond realistic levels,” adds Cox. “Sunny Beach for example, one of the most popular investment locations, is well beyond the means of locals and there has been oversupply.” But the point for investors is to look beyond the more obvious places, so rather than Sunny Beach and Golden Sands, look at Sozopol, Dyuni, Primorsko, Kiten and Lozenets, where you might still find apartments for as low as €36,000. Indeed, following fears of over-development, Bulgaria is emphasising the eco-credentials of its newer developments, and the natural beauty of their surroundings. It is still a short season of about four months, so any prospective landlord has to factor in the prices during the season. It may also be worth a look at Romania, which also has a coast on the Black Sea, and which is not as developed as Bulgaria. Here, the towns of Constanta, Costinesti and Mamaia are busy with regional tourists and property costs from around €45,000 plus for apartments, rising up to €110,000 for villas.
CLIMB EVERY MOUNTAIN
The backbone of eastern Europe is the Carpathian mountain range, of which the Tatra range in Poland is a significant part. The most famous mountain resort in the whole of eastern Europe is Zakopane, an established ski centre that attracts
