Over the last year a significant new trend has started to be evident in the Slovak market. While until recently the focus of most investors has been on city properties, in search of longer term letting to companies and professionals, today increasingly many are exploring previously untapped opportunities in some of Slovakia’s top tourist locations.
The benefits are promising: growing holiday-let returns as well as exceptional capital growth potential. Not to mention, of course, the joys of owning a holiday home in one of the most beautiful corners of Europe.
Prior to attracting foreign buyers, Slovakia’s main tourist and ski centres have already seen a huge surge in popularity among local second home buyers. Owning a holiday home in the mountains has, over the last year or two, increasingly become a matter of not only convenience but also prestige.
Responding to the demand from mostly Bratislava families, several new developments have been offered to holiday home buyers in the last 15 months. They have two things in common: extremely fast sales (several dozens of units often selling out in a matter of a few weeks) and higher and higher prices.
Although prices of some of the newest homes in holiday regions already reached top prices in central Bratislava, developers are optimistic. It seems they have good reasons to be.
First, they bank on the short supply. Due to Slovakia’s strict protection rules for national park areas (covering much of the mountain & ski regions) new developments in the country’s most popular holiday destinations are (and will continue to be) rare. Second, there will always be a sufficient number of wealthier local buyers willing to pay up to own a prestige home in their favourite Slovak winter (or summer) holiday spot.
Among the several popular mountain ranges in Slovakia the High and Low Tatras and Velka and Mala Fatra are the most well known. (Central Slovakia and centre-north.)
The Low Tatras feature the best skiing and ski resorts, most popular being Jasna and Donovaly (Jasna is the largest & best ski centre in Central Eastern Europe). The best resort in the High Tatras is Strbske Pleso with its beautiful scenery but relatively limited size.
Holiday letting
If one is to have any chance of letting a property to holiday makers, it needs to be in or very close to an established and popular ski resort or main tourist centre. Some areas, such as the Low and High Tatras, have also the advantage of being visited in both winter and summer which is not the case in other ski centres such as Velka Raca (near Zilina).
Occupancy in dual season resorts is consequently much higher than in any other area of Slovakia, and properties can achieve up to 30-50% annual occupancy provided located in one of the top tourism spots. The farther away the less suitable for letting (more than 10-15 minutes drive or ski bus ride will generally dramatically lower rental appeal of a property).
Resorts with winter season only will rarely suit for letting (if any profit is to be achieved) as annual occupancy will be as low as – or lower than – 20%.
One needs to consider rates are still low in Slovak tourist centres (SKK 250-800/night/bed depending on season and quality, up to SKK 1,200 for high standard accomodation in top season – Year End/New Year). Above rates apply to self-contained chalets, homes, apartments in top tourist areas close to all attractions and facilities.
This however means that only buying a property at relatively low m2 (sq meter) price will give an investor a return on rental. In the best of circumstances a 4-8% NET yield is achievable (although relatively rare). The very steep prices of a majority of the new projects make them suitable for second home buyers looking for own use rather than rental returns. Most of the new holiday resort properties currently sell at GBP 900 – 1,400/m2 (incl. VAT) and will barely yield 1% net.
It is still possible to buy at a reasonable price, making holiday rentals a profitable option. An older home or cottage can also prove a good holiday-let, however, a location close to the ski centres and other attractions is a must if it is to appeal to tourists. The good news is, rates for tourist accomodation in main holiday centres are going up year after year (though not as fast as purchase prices in such areas).
Properties can be let to holiday makers through Slovak travel agencies; there are several that specialize in self-contained accomodation for winter & summer holidays. For the more hands-on owners, running a website or using one of the international holiday rental sites can prove worthwhile.
Important to keep in mind is travel agents will only do the letting (booking); the owner/investor has to arrange cleaning, washing, check-in/out service. In some of the new developments of chalets or apartments such services can be provided (at a fee) by the developer or administrator. In all other cases a common solution is finding a local to perform such tasks (often at comparatively low fees).
While holiday letting has its particularities and several issues need to be considered with care, the results (provided one gets it right) can be extremely gratifying and often more profitable than long term rental. This is increasingly proving to be true in some of Slovakia’s magnificient mountain resorts.
Source: http://www.slovakiainvestmentproperty.com
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