Property Market Boom in Eastern Europe
10.07.2007The urban property market is booming across ex-communist EU member states as foreign investors flood in and locals climb onto the property ladder -- even in the region's dour concrete tower-block estates. Average prices in the Polish capital Warsaw rose by more than 50 per cent last year to reach 1,935 euros (2,620 dollars) per square metre, according to the RedNet property agency. A square metre in a top-of-the-range building in the city currently fetches 5,000 euros. Luxury buyers in other countries which joined the EU in 2004 can get a better deal -- in Budapest, Hungary, the price is around 4,000 euros, while in the Slovak capital Bratislava they can expect to pay 3,500 euros. In the Czech Republic, meanwhile, a square metre of luxury property in Prague goes for some 4,500 euros. In a sign of the times, even the "panelaks" -- Prague's faceless communist-era six-storey blocks -- are now in demand. Over the past five years, the price of a 60-square-metre apartment in Jizni Mesto, an estate in the city's south, has almost doubled to 80,000 euros. "Demand has increased a lot because they are still affordable for people without high wages," said Robert Persein, an estate agent at the Cesko-Moravska company. Pavel Kuhn, of the Ceska Sporitelna bank, noted that Czechs are now taking out 30-40 year mortgages. In Lithuania, prices soared from 500 to 1,700 euros per square metre between 1998-2006. In contrast, average monthly salaries over the same period rose from 300 euros to around 460 euros. Across the Baltic states, real estate prices grew in 2005 by 55 per cent in Latvia, 40 per cent in Lithuania and 28 per cent in Estonia, according to the bank DnB Nord. In Romania, which joined the EU in January, house prices in Bucharest have tripled over the past five years and the boom is encouraging people to set up shop as property dealers, according to Felicia Nitu of the trading company Real Estate Exchange.Prices in neighbouring newcomer Bulgaria began rising fast in 2006, just ahead of EU membership. "Demand remains strong, and since the beginning of 2007 prices rose by 15-20 per cent on average," said Teodora Dimova of the ERA Bulgaria real estate agency. With prices also climbing across the region for offices and holiday homes, there are growing warnings of a real estate bubble, particularly in Prague and in the Latvian capital Riga. "The crediting and real estate madness that started a couple of years ago, what I would call this feast in times of plague, cannot last forever," warned Edgars Sins, the head of the Latvian Real Estate Association and boss of leading real estate company, Latio.
