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Real estate - with prices dropping and rents freed, it's a buyer's market

Now is the time to buy real estate in Slovakia, say real estate professionals. Offer is currently far greater than demand on the market, and with the nation's economy in a precarious state, those selling real estate are finding they have to accept prices for their properties that are well below what they were even a year ago.
"For buyers this is a good time," said Igor Fedoroňko, the statutory representative of Bratislava Realitná Kancelária. "There is not enough money on the market, and with offer so much greater than demand, we have pages and pages of listings."

Now is the time to buy real estate in Slovakia, say real estate professionals. Offer is currently far greater than demand on the market, and with the nation's economy in a precarious state, those selling real estate are finding they have to accept prices for their properties that are well below what they were even a year ago.

"For buyers this is a good time," said Igor Fedoroňko, the statutory representative of Bratislava Realitná Kancelária. "There is not enough money on the market, and with offer so much greater than demand, we have pages and pages of listings."

Fedoroňko predicted that prices for residential real estate in and around the Slovak capital would be stable or decline slightly before the end of 1999. "The economic situation of course is very bad and won't improve over the next one or two years," he said. "And as rent and gas prices continue to rise, even more people may start thinking of selling their properties."

Using the benchmarck of a two-bedroom residential home, Fedoroňko estimated that the average dwelling in Bratislava city proper was presently listed at between two and three million Slovak crowns ($45,000-$60,000), while a similar house within 15 kilometers of the city centre was 1.5-2 million crowns ($30,000-$45,000) and beyond 30 kilometers of the capital below 500,000 crowns ($12,000).

The situation is much the same with business real estate. Marek Vrbovský, of real estate consultants HB Reavis Group, said that while 'high-tech' upscale office space was in short supply and high demand in Bratislava, "there is currently plenty of affordable, mid-level space available. Prices are declining for this kind of office space, and I think this is a trend that will continue."

Of course, what is good for the gander is not always good for the goose. Sellers and builders of real estate complain that the high prices of new flats is making the used-housing market much more attractive for Slovak buyers, while regulated housing prices ensure that the costs of construction of rental housing are never met.

Pavol Minárik, deputy director of financial strategy and construction at Bratislava City Hall, said that his office was concentrating on building cheap housing for purchase by young families.

"Our concept of flat construction is focused on building premises that can be immediately sold, not rented," he said. "At this time we are building social flats for young couples, but we would like to build more luxurious flats in the near future."

"In some parts of Bratislava, like Petržalka and Nové Mesto, we have already built medium-quality flats," Minárik continued, "but these flats are still very expensive for most people. We would like to establish some form of cooperation with [construction savings company] Stavebna Sporiteľňa, because the purchase prices are very high for people. That's why people are these days speculating so much with purchase and sale of private flats."

The only ray of hope on the sellers' market is the recently-anounced increase to the regulated prices for state-owned housing rents. As part of its economic package announced on May 31, the government resolved to hike rents by 70% as of October 1 this year.

The Construction Ministry's Vladimír Cvacho told a news conference on June 2 that his ministry had built 2,400 apartments in Slovakia in the first quarter of 1999, and with the announced increases in rental prices, there was a realistic chance that the full year planned construction target of 10,000 apartments nationwide would be reached.

Cvacho explained that state housing policy had been bedevilled by regulated rents, since the state's income on rented property was far below construction costs. Since 1964, he said, rent has increased only once, in 1992, when it doubled.

The ministry had fixed on an increase in rental prices of 70% since this figure equalled net inflation since 1992, and should cover losses accumulated over the last six years. But Cvacho warned that rents would have to be increased by 30-40% annually to keep pace with costs.

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