Trying to get an understanding of the Eastern European real estate market, the seeming contradictions , and the lure of buying off plan apartments in new EU member countries like Romania? Unanswered questions like "will the bubble burst," "statistically speaking will Romania property prices continue to increases after Jan. 1 2007" and many others are answered by the experts in a illuminating article recently featured in the International Herald Tribune.
Real estate prices have risen as much as 100 percent in the eight former communist states that joined the EU in 2004, driven by buyers from Western Europe .
Prices will continue to rise as borrowing patterns begin to mirror Western ones, said Herbert Stepic, chief executive of Raiffeisen International Bank, a Vienna financial services company that has more than 2,500 outlets in Eastern Europe, including Russia .
"I see no signs of a bubble," Stepic said.
So far, British and Irish investors have led the surge of homebuyers into the new EU countries, searching for bargains and investments after house prices boomed in their own countries, said Mihails Morozovs, a managing partner at Colliers International.
"It has been quite wild," Morozovs said. "We are quite happy with the existing situation."
In London , Liam Bailey, head of residential research for the real estate agency Knight Frank, said: "These are people who are either buying the lifestyle, a home abroad that they can enjoy, or they are investing, speculating on how they can ride the wave. The whole market has matured and developed rapidly."
Eastern markets are cheap for many West Europeans. The price of apartments in Chelsea , a trendy neighborhood in London 's West End , rose to an average of £507,000, or $967,000, in the first four months of 2006, according to Knight Frank.
The story is similar in Denmark , where prices are rising at an annual rate of 16.1 percent, and Ireland , with average increases of 10.7 percent.
In Budapest , an average two-bedroom apartment is selling for 21.7 million forint, or $103,710, almost triple the cost seven years ago, according to the market researcher GKI Gazdasagkutato. In the city center, prices are expected to jump 15 percent this year, GKI said.
In the Czech Republic , a record €1.47 billion, or $1.89 billion, was invested in real estate last year, 17 percent more than in 2004, according to the Chicago-based agency Jones Lang LaSalle. The Prague region is attracting most of the buyers.
In Budapest , 5,000 foreigners bought properties last year, about the rate as the year before, said Daniel Valko, an analyst at the Budapest-based real-estate brokerage Otthon Centrum. "The Irish and the British were the first to arrive after EU accession," Valko said. "Now, more and more Spanish, Dutch and Italians are looking to buy properties in Budapest ."
Last year, the number of Warsaw apartments bought by foreigners grew 11 percent, to 1,367.
The city's most expensive apartment building, called the Belvedere Residence, is sold out, though work is still under way. Unfinished penthouses were being sold this year for 21,000 zloty, or $6,903, a square meter.
"The sky is the limit," Dymkowski said. "The prices are astronomical for many Poles, but are still far below EU levels. In general, a luxurious apartment can still be purchased for the price of a modest studio in London ."
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