Slovakia's property market boosted by major investment
27/03/2007

A Major investment from large international companies has helped to boost the Slovakian property market, while also providing substantial support for the country's economy and its efforts to join the European single currency.

Increasingly attractive to foreign property investors, Slovakia's economic performance has meant that, unlike others in the region, the country is well-positioned to meet the criteria set out by the European Union (EU) for adopting the euro currency.

The emerging economy has prompted a number of large firms to relocate to Slovakia, which has in turn helped to further advance the country's development.

One of these companies, German energy firm E.ON, recently announced that it intends to invest €200 million (£135 million) in Trnava, in west Slovakia, to construct a new natural gas-fuelled power station, the Czech Business Weekly.

The company is reportedly also negotiating with the Slovak government over developing other potential sites for the country's nuclear power programme.

This level of investment from large companies has occurred regularly for the last few years, particularly since the country joined the EU in 2004.

Commenting on this trend, Debora Revoltella, chief economist for central and eastern Europe at the UniCredit Group, stated that the electronics industry had also expanded in recent years, with both Sony and Samsung extending their facilities in the country, the Sofia Echo reports.

South Korea-based electronics firm Samsung announced earlier this month that it would follow the likes of Kia Motors and PSA Peugeot Citroen, and make a substantial investment in Slovakia.

The firm is expected to invest €320 million in the Trnava area when it establishes a new liquid crystal displays (LCD) factory there.

Such a move is likely to create in excess of 1,000 jobs for local workers, while high levels of investment in infrastructure and higher incomes may have a positive impact upon the region's property market.

These trends have been seen elsewhere, with Kia Motors' decision to build a manufacturing plant in the northern city of Zilina having brought over €1 billion of investment to the area and rapid property development and price rises, the Times of Oman reports.

Since the plant was established in 2004, house prices have risen by 30 per cent, unemployment levels have fallen from ten per cent to 3.4 per cent and wages have improved by ten per cent. These factors have driven the local real estate development market, which has seen new hotels and residential areas, as well as business and retail centres, constructed in recent years.

Crucially, the opening of new factories and manufacturing plants in emerging markets may also see companies' suppliers move within easy reach – as is expected following the Samsung announcement – further boosting the economy and making the country a far more attractive option for potential foreign property investors.

Although a number of eastern European countries continue to demonstrate rapid rates of economic growth, the latest report by SEB Economic Research suggested that both the Latvian and Estonian economies are likely to overheat in the near future.

Slovakia, on the other hand, appears to be introducing the reforms and fiscal policies needed to stabilise its economy to ensure that it remains "on track" to join the euro in the next few years, according to a report by Standard and Poor's.

Membership of the EU has helped to provide significant opportunities for British investors seeking to capitalise upon the economic growth demonstrated by several eastern European countries, according to Kate Hamilton, spokesperson for Homes Overseas, who suggested that further developments could provide greater security for investors.

"It is much more positive that so many countries have joined the EU to make these economies much more stable from a British buyer's point of view," she remarked.

"This position can only improve as the eastern European countries look to adopt the euro [which] makes them a much safer bet than they were previously."

Government officials from Slovakia recently met with their Slovenian counterparts to discuss their experience since joining the European single currency, the Slovene Press Agency reports.

Slovakia has set out a timetable for adopting the currency, with the aim of meeting the EU's criteria by the beginning of 2009.

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