CE Invest

Slovakia: Residential & Commercial Markets

SLOVAKIA

The Residential Market

There is demand for residential real estate in Slovakia; however buyers are much more cautious. The prices are lower, bringing with them lower quality, which is expected to affect new projects in the next 5-10 years. Investors concentrate on sustainability. Low quality projects on the residential market are certainly a looming concern – “This is the key factor that will affect selling in the next couple of years,” explained an expert at the Real Estate and Development Conference, Bratislava on May 3, 2010.

The purchasing power of Slovaks has decreased by only a minimum – the effects of the crisis will be delayed, felt from the second half of 2010, especially in the services sector. The production industry is already going up.

At the moment there are 4000 unoccupied unsold apartments in Bratislava in new buildings. Young families are looking for discounts, good deals – 40-80 m2 apartments. In this atmosphere of oversupply, agencies do not list every apartment, only the ones that have the potential to be sold within 3 months. Around 40% of the current offers on the market are advertized for unrealistic prices, the actual sales price is usually 20% below the publicized price. It is the agents’ responsibility is to inform the seller about the realistic price; if the price is right, the property will be sold within a month. If it is not sold within 3 months it is not worth investing in advertizing at the same price. Agents must be creative in using the right wording to target the proper groups and using uncharted marketing channels.

According to the real estate agency RE/MAX SLOVAKIA the sale and rent of property should increase by 15% in 2010. Prices of residential property have fallen by 10% in the first quarter of 2010. According to the analyst of Postova Banka the prices of houses and apartments were the lowest in the last quarter of 2009. Prices returned back to the level of the end of the year 2007. Any increase will depend on the labor market.

Doom for the Construction Industry

It will be another two years before the apartments currently being built will be bought. The construction sector has fallen 8-12% since 2008/2009. The price of materials continues to drop, the building sector is no longer about revenue, it is merely about survival. The price of labor is going down. 2010 already brought dramatic decrease, new orders are not coming in, the only possibility is EU funds, PPP funds; this will be the year of dramatic downsizing in the building sector, with massive unemployment.

Commercial Scene

All new projects are mostly retail projects – for example Boria, Aupark in Kosice, Central (also residential) on Trnavske Square, and Trnava. Bratislava has potential for one more shopping center, namely in…

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