Investment In Property

Central and Eastern Europe has seen a surge of investment in property. This has dramatically changed the dynamics of investment in property there. A Financial Times report suggests that rather than simple growth in capital values, investment in real estate will have to depend on asset management strategies that enhance yield.

Some erstwhile emerging markets have now become more established, and investment in property there now provides almost the same yield as Western Europe. Whilst this reduces many risks associated with investment in property in new markets, investors must be more innovative to increase the yield of investment in property. Emphasis of investment in property today is on location and potential for development. Return on investment in property is being driven by a search for value rather than market momentum.

The advantage of an investment in property in many Central and Eastern European markets is good economic fundamentals. Bulgaria for instance saw a GDP growth of 6% in 2007. With its EU membership and an influx of euros into developmental projects, prospects for investment in property look good. However, as prices increase, the focus of investment in property will be choosing or rather building good quality assets.

Many investments in property have moved from a high-yield acquisition model to a high-yield development model with an emphasis on buy-to-let investment properties. The theory is that economic growth will lead to higher rentals. In Hungary, for example, prime business rents have been rising after a long plateau in rates. However rental cycles differ widely across the region and must be studied closely by those seeking investment in real estate for the rental market.

For investment in industrial properties too most important is the quality of the property. For example, industry experts recommend investment in real estate in areas like the northerly Romanian province of Transylvania where they feel infrastructure development is creating new industrial hotspots.