Spotlight on…Bratislava

by Steenie Harvey

I expected to report back on Bratislava’s investment possibilities, sure. But lifestyle? Former communist countries rarely make the wish list of second-home buyers.

Yet Bratislava is more beguiling and livable than you may imagine. Straddling the Danube, Slovakia’s capital certainly captivated me. At the heart of the former Austro-Hungarian Empire, it’s jolly, cultured, and civilized. When did you last see youths rushing to give up tram and bus seats to the elderly?

Its smart shops and restaurants wouldn’t be out of place in Vienna. Neither would the stately cafés with their antlered wooden coat-stands, aproned waiters, and glass cases of calorific cakes. espresso coffee, Viennese coffee, even Alzirska Kava: coffee with egg nog and whipped cream.

But here in Bratislava, rich coffee with a slice of chocolate scrumptiousness costs only a couple of dollars. Hearty $4.75 lunches are the norm, not an exception. Good seats at the state opera and ballet are less than $17.

Monthly living expenses are also affordable—for most apartments, $140 to $170 for heating and all utilities. With a square foot average of just under $250, those apartments cost a fraction of comparable properties in other European capitals.

Central Europe means cold winters. But some people—me included—enjoy Christmas card scenes of Advent markets, snowflakes falling on cobbled squares, and icicles glittering from medieval gables. In deepest winter, an ice-skating rink appears in front of the Opera House.

Spring, summer, and fall are as pleasant as Vienna—45 minutes down the motorway. Throughout central Europe, summer temperatures usually hit the high 80s. Within an hour’s drive, you’ll also find rolling countryside, spa towns, and vineyards. Yes, vineyards. Like the $1.30 beers, Slovakian wines are excellent. And I never paid more than $1.50 a glass.

Czechoslovakia split into the Czech Republic and Slovakia in 1993. The Czechs—particularly Prague—got the attention, the investment, and the property boom. Slovakia and its 5.45 million people seemed almost forgotten.

Not anymore. Big things are happening, with Bratislava leading the charge. Futuristic-style office complexes and new apartments are rising fast. Like in other ex-communist countries, the emerging middle class wants to escape the concrete blocks built for the proletarian masses.

Many Western Europeans would envy Bratislava’s huge, gleaming malls. The two I visited (Polus and Aupark) were packed. Citizens have money...and they’re spending. No sign of the global credit squeeze here.

I last visited Bratislava almost five years ago, on a daytrip from Vienna. Slovakia wasn’t then an EU member—and the two cities were worlds apart. Despite Bratislava’s architecturally attractive old center, I wasn’t impressed. Everywhere smacked of down-at-heel drabness.

Prague, Budapest, and even Warsaw made sense...Bratislava didn’t. That’s how global corporations and developers saw it, too.

Things changed with EU membership, business-friendly policies, and the introduction of a flat 19% tax rate. Forbes magazine even highlighted Slovakia as an “investor’s paradise,” with the potential to become another Ireland. The corporate world’s princes took note—and came courting.

Record inflows of FDI have seen unemployment slashed from more than 19% in 2001 to 7.8% at present. GDP growth in 2007 was 10.4%. Adopting the euro in 2009 remains on course.

Various global giants have set up, but the brightest star is the auto industry. The new Volkswagen, Peugeot, and Kia plants made 570,000 units last year. Slovakia claims it’s now the world’s biggest per-capita car producer. Peugeot’s plant near Trnava is only 45 minutes from Bratislava. Volkswagen is on the city outskirts.

Buy wisely in this booming economy, and I believe you can benefit from rising real estate prices. In 2007, the average price of Slovakian residential property grew 24% to $180 per square foot. The Bratislava region showed a 21% rise to $240 per square foot. That’s incredibly cheap for a European boom city.

Bratislava has five districts. I concentrated on neighborhoods where communist-era panel apartments are few. If the concrete jungle appeals (doubtful), head to sprawling Petrzalka, District Five.

Old Bratislava: Half the price of Prague

Bratislava’s hotspot is Stare Mesto, the now spruced-up Old Town in District One. Overlooked by a castle, its atmospheric streets, spires and palaces breathe the magic of long ago. To Hungarians who crowned 11 of their monarchs here, the town was Presporok—to German-speakers, Pressburg. Those old names still pop up.

But there’s more than medieval gateways and quirky statues. High culture and street theater...numerous dining, drinking, and entertainment options. In short, plenty to keep you amused.

The compact old center is “livable,” but District One’s housing mix also includes pre-World War II apartment blocks and some socialist functionality. Old Town and newer properties can be found for $135,000 to $160,000, but expect little space: 350 to 400 square feet. Even so, studios can be money-spinners. In low-season March, I paid $85 nightly for a rental studio on District One’s edge. Quality tourist rentals are still in limited supply.

Most Stare Mesto apartments are $375 to $500 per square foot. Putting it into perspective, that’s around half the cost of Prague’s historic District One. During my visit, the Slovak-Canadian agency had two restored apartments on Heydukova. This street is five minutes' stroll from the Old Town Hall. One 700-square-foot apartment is $265,500, another at 1,200 square feet is $384,102.

The priciest spot is within Stare Mesto’s 12th-century core. With some embassies for neighbors, a three-bedroom apartment (860 square feet) on Frantiskanske Square through R&V agency is $637,569.

For capital appreciation, most of District One should prove a good short- to medium-term bet. Regarding buy-to-lets, local agencies cite returns of around 6% to 8%. Ignore extravagant claims (10% plus) by some U.K. websites.

Upgrading a 700-square-foot apartment to tourist expectations costs around $19,000 to $24,000. This covers installing radiators and a new boiler for hot water supply, new kitchen, bathroom, and new parquet flooring.

Here parking is at a premium and not all buildings have elevators.

New Bratislava

Buy sensibly, and new developments can also offer good capital appreciation prospects. However, don’t believe hype about stunning rental returns. Bratislava’s middle class wants to buy, not rent. And they don’t want concrete blocks built on the cheap. Some new-builds in Bratislava and near the Trnava car plant are a poor investment buy. The demand is for brick, not concrete.

Be particularly wary of overpriced apartments purchased by foreign speculators seeking quick resales. Some are in “lights out” buildings, empty of tenants. Residents who can’t get mortgages will rent. But unless it’s an apartment share, usually only at the low levels found in unlovely Petrzalka—$750 monthly is still too much for most local couples.

Until recently, Bratislava’s new residential market was mainly dominated by small and medium-sized developers. They built modest complexes designed for local pockets—or speculative projects for foreign “investors.”

This is changing. Under Bratislava’s dynamic new development plan, former factory sites are vanishing and the Danube’s banks being transformed. The city’s planners envisage mixed-use developments: quality housing, office and retail space, leisure and sports facilities.

They expect Bratislava’s overall population of 425,000 to increase to 550,000 by 2030. That’s understandable, with most jobs in and around the capital. More than 3,000 hectares are earmarked for development, but plots will be released in stages to prevent oversupply. Some developments won’t be completed until 2013; others are now coming on stream.

Stretching along the Danube’s North bank for 800 meters, the luxury Eurovea project has a grandstand position. Already underway, the concept is to extend the historic city to the river. Some apartments have views of Bratislava Castle; the Old Town is a short walk away.

Along with the Slovak foreign minister’s wife, I viewed a show apartment at Eurovea’s launch party. I rarely report on high-end properties, but then I’ve rarely seen anything so stylish and sophisticated.

The developers, Ballymore, have an outstanding track record for quality European projects. In four blocks, Phase One’s 254 apartments have prime riverfront position. The complex will include an upmarket mall, 24,000 square meters of grade-A office space, a Sheraton Hotel, and leisure/entertainment facilities. Already in use, the Slovak National Theater is the focus of Eurovea’s new city square...Europe’s biggest new public space.

Given the limited availability and unique position, prices aren’t unreasonable for true waterfront luxury in a European capital. As in all former Iron Curtain countries, some locals have made fortunes. After day two of launching, 86 properties had sold. Including VAT, starting figure is $429,200 for a 360-square-foot studio. One-bedroom units (570 square feet) start at $683,700.

Bratislava’s District Three takes in the New Town ( Nove Mesto). Quite a few new developments have appeared in the past two years, but many of its 62,000 residents live in 1920s apartment buildings.

With broad boulevards, grassy parks, and small lakes, Nove Mesto feels spacious. Public transport to the city center is good. Residents also have the massive Polus mall and plenty of leisure facilities.

A landmark development is III Veze (Three Towers). Marketed as an “American-style living concept,” its three elliptical towers are beginning to take shape. Each tower has 24 floors containing 211 apartments. Views are either toward the Carpathian foothills or Bratislava Castle.

Two towers have already sold out; the third is filling rapidly. Everything is either sold or reserved but you could join the waiting list of potential buyers hoping for reservation cancellations. Prices: VAT included, from $121,450 for 400-square-foot studios; $149,442 for one-bedroom units; $224,681 for two-bedroom units of 760 square feet; and $437,694 for three-bedroom units (1,120 square feet).

Residence Raca Vineyards is near the city, but not in it. Now also part of District Three, Raca was a vineyard village until 1946. In Bratislava’s northeast, this is where the forests and sloping vineyards of the Carpathian foothills start. I personally like the idea of doorstep vineyards...

In five low-rise buildings, its 117 apartments are due for completion by mid-2009. One- to three-bedroom units range from 480 to 1,000 square feet. Price: Including VAT, from $157,903 to $330,854.

There’s much more to Slovakia—for example, I’d have liked more time to investigate the nearby spa town of Piestany. (I saw a classy 700-square-foot apartment here for $165,600.) But with Bratislava on the upward curve, my advice is catch it while you can.

Need to know

Payment terms

Depending on status, foreigners can get mortgages up to 80%.

Off-plan and new-build: Various options are available and vary between developments. Typically it’s 20% to 30% up front, and the balance on completion.

Re-sales: Normally 10% deposit, with the balance on completion.

Legalities

Apart from agricultural land and forests, foreigners can buy without restrictions. A lawyer is vital for verifying title and drafting a purchase agreement. As mortgage options for foreigners increase, a good lawyer will also represent you at banks or other financial institutions. Legal contracts are in Slovakian, so you’ll need English translations.

All Slovak agencies require the seller to provide a Kataster (from the Cadastral register) detailing the property’s legal status. This cannot be more than three months old.

Additional costs

Realtor’s commission: 2% to 5%

Lawyers fees: $1,250 to $3,150

Land registry: Within 30 days, SKK 2,000 ($102). Expedited in 15 days, SKK 8,000 ($408)

Transfer tax: Abolished in 2004

Capital gains tax

Owned five years or more: None

If it’s been your primary residence for two years or more: None

Otherwise: 19%

Inheritance tax

No inheritance tax levied between spouses, parents, children, and direct descendants.

Annual property tax

Differs between regions and municipalities, but generally low. The rate for Bratislava’s Stare Mesto is 12 SKK (58 cents) per square meter.

Real estate contacts

R+V Real SK(Mario Antalík); Dunajska 3, 81108 Bratislava; e-mail: rvreal@rvreal.sk.

Eurovea Apartments; Eurovea Pavilion, Prístavna 16549/10. 82109 Bratislava; e-mail: kkuklovska@ballymoregroup.com.

Three Towers (Dominika Masarova); III Veze Sales Office, Laurinska 15, Bratislava 1; e-mail: masarova@lexxus.sk.

Residence Raca Vineyards(Eva Dobisova); Realitna Skanska, Pasaz Slovenskej Sporitel’ne, Namestie SNP 18, 81102 Bratislava; e-mail: eva.dobisova@skanskareality.sk (in Slovakian, but gives a good idea of the development).

Slovak and Canadian Consulting(Adriana Laukova); Spitalska 57, 83102 Bratislava; e-mail: adrianal@scconsulting.sk.