BiH-x
October 16th, 2007, 09:49 PM
In Eastern Europe, where home prices are exploding, developers aren't simply transforming decades-old apartment buildings into luxurious condominiums.
Here, taking advantage of the residential real estate boom means gutting a historic property for flats or trying to sell a castle to casino operators.
And no wonder. From second-quarter 2005 to second-quarter 2006, median home prices in Bulgaria improved at a 12.2% clip. Bulgarian real estate jumped 27.1% last year. Properties in Latvia's Riga market improved by 37.7% last year, and from second-quarter 2006 to second-quarter 2007, those in the Tallinn, Estonia, market grew by 20.2%, according to Newmark Knight Frank, an international real estate investment firm.
These numbers, however, do not apply to the housing stock as a whole.
A significant portion of Russia's real estate boom, for example, is being attributed to new homes in St. Petersburg and Moscow, where prices last year rose 115% and 92%, respectively.
"Numerous apartment projects entered the Moscow market [last year]," says Ekaterina Thain, director of Newmark Knight Frank's Russian operations. "Most of them within the Moscow International Business Center, Moscow City site," a prominent business district.
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In these cities, property values aren't uniformly appreciating; rather, the new moneyed are building bigger, better homes. One such property, the 2.49 billion ruble ($100 million), 100,000-square-foot Eurasia estate built this year just outside Moscow, features Russian and Turkish baths, a full-sized indoor swimming pool and a state-of-the-art security system. The home is being built as a spec house.
Châteaux or state houses now in private hands represent another segment of the region's growing luxury-housing market. These are now being listed as owners try to cash in at the top of the market. One example is a 62,000-square-foot, neo-Baroque castle 80 miles outside Prague in the Czech Republic. It was originally built for a Bohemian duke, sits on 50 acres and is now being offered for 106.8 million Czech korunas ($5.5 million) and marketed as a great site for a hotel or casino.
Two others, one in Latvia and one in the Czech Republic, used to serve as official state properties. The Latvian home, in Riga, is a luxurious estate overlooking the Baltic Sea that was used as a governor's mansion, as well as an official state home by the Soviets, Nazis and then again the Soviets in their various occupations between 1938 and 1991. The Czech mansion, located in Vysocina, outside Prague, was used as an entertainment venue for the Czechoslovakian government between 1948 and 1989 and features all the finishings and refinements of a property used to host foreign dignitaries.
The increasing availability of credit, which has long been very expensive in many Eastern European markets, is helping keep regional sales strong.
Pireaus, a Greek bank, seems to be expanding its loan packages in Bulgaria on a daily basis, as more than 30,000 British investors alone have already flocked to the country to take advantage of the growing real estate and tourism markets.
"The low property prices in Bulgaria have made the market extremely appealing for investors," says Irini Tzortzoglou, head of retail banking at Pireaus. "Many are buying properties off-plan with a view to obtaining capital gain and rental income from tourism once completed."
Still, industry experts say the recent price inflation isn't boundless. These rapid price growth figures don't mean that there is a price bubble about to burst and that Eastern European luxury real estate is anywhere close to the correction being felt in the U.S. market; only that the markets find themselves in the midst of a huge run-up.
"Things are not moving as fast as they used to move," says Philippe Bogdanov, general director of Kirsanova Realty in Moscow. "The reason why is that the prices grew so rapidly, and there's a limit on how much prices can rise."
Gallery: http://www.forbes.com/2007/10/12/europe-eastern-property-forbeslife-cx_mw_1015realestate3_slide_2.html?thisSpeed=15000
Link: http://www.forbes.com/forbeslife/realestate/2007/10/12/europe-eastern-property-forbeslife-cx_mw_1015realestate3.html
Here, taking advantage of the residential real estate boom means gutting a historic property for flats or trying to sell a castle to casino operators.
And no wonder. From second-quarter 2005 to second-quarter 2006, median home prices in Bulgaria improved at a 12.2% clip. Bulgarian real estate jumped 27.1% last year. Properties in Latvia's Riga market improved by 37.7% last year, and from second-quarter 2006 to second-quarter 2007, those in the Tallinn, Estonia, market grew by 20.2%, according to Newmark Knight Frank, an international real estate investment firm.
These numbers, however, do not apply to the housing stock as a whole.
A significant portion of Russia's real estate boom, for example, is being attributed to new homes in St. Petersburg and Moscow, where prices last year rose 115% and 92%, respectively.
"Numerous apartment projects entered the Moscow market [last year]," says Ekaterina Thain, director of Newmark Knight Frank's Russian operations. "Most of them within the Moscow International Business Center, Moscow City site," a prominent business district.
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In these cities, property values aren't uniformly appreciating; rather, the new moneyed are building bigger, better homes. One such property, the 2.49 billion ruble ($100 million), 100,000-square-foot Eurasia estate built this year just outside Moscow, features Russian and Turkish baths, a full-sized indoor swimming pool and a state-of-the-art security system. The home is being built as a spec house.
Châteaux or state houses now in private hands represent another segment of the region's growing luxury-housing market. These are now being listed as owners try to cash in at the top of the market. One example is a 62,000-square-foot, neo-Baroque castle 80 miles outside Prague in the Czech Republic. It was originally built for a Bohemian duke, sits on 50 acres and is now being offered for 106.8 million Czech korunas ($5.5 million) and marketed as a great site for a hotel or casino.
Two others, one in Latvia and one in the Czech Republic, used to serve as official state properties. The Latvian home, in Riga, is a luxurious estate overlooking the Baltic Sea that was used as a governor's mansion, as well as an official state home by the Soviets, Nazis and then again the Soviets in their various occupations between 1938 and 1991. The Czech mansion, located in Vysocina, outside Prague, was used as an entertainment venue for the Czechoslovakian government between 1948 and 1989 and features all the finishings and refinements of a property used to host foreign dignitaries.
The increasing availability of credit, which has long been very expensive in many Eastern European markets, is helping keep regional sales strong.
Pireaus, a Greek bank, seems to be expanding its loan packages in Bulgaria on a daily basis, as more than 30,000 British investors alone have already flocked to the country to take advantage of the growing real estate and tourism markets.
"The low property prices in Bulgaria have made the market extremely appealing for investors," says Irini Tzortzoglou, head of retail banking at Pireaus. "Many are buying properties off-plan with a view to obtaining capital gain and rental income from tourism once completed."
Still, industry experts say the recent price inflation isn't boundless. These rapid price growth figures don't mean that there is a price bubble about to burst and that Eastern European luxury real estate is anywhere close to the correction being felt in the U.S. market; only that the markets find themselves in the midst of a huge run-up.
"Things are not moving as fast as they used to move," says Philippe Bogdanov, general director of Kirsanova Realty in Moscow. "The reason why is that the prices grew so rapidly, and there's a limit on how much prices can rise."
Gallery: http://www.forbes.com/2007/10/12/europe-eastern-property-forbeslife-cx_mw_1015realestate3_slide_2.html?thisSpeed=15000
Link: http://www.forbes.com/forbeslife/realestate/2007/10/12/europe-eastern-property-forbeslife-cx_mw_1015realestate3.html