Could Global Downturn Boost Eastern European Property Markets?
It doesn’t matter which way you look at it or who’s data you’re reading, the property markets of the developed economies are definitely not going to be the attractive investments that they have been in previous years.
In fact in many cases holding onto their current value is just about as optimistic as it gets. The current negative sentiment towards the property market in UK and US may well convince you that it’s a good time to stay well clear of any property market, however, it could just be the perfect time for you to consider taking a serious look at property investment abroad, especially in the economies of the emerging Eastern European property markets.
Of course, no one can deliver 100% guarantees in any investment market at home or abroad, there are however some good indicators that the Eastern European economies may well prove a very attractive proposition to property investors eager to escape the current downturn and stagnation of their home property market, while at the same time looking for sustainable long term investment growth in alternative markets.
It’s true that there has been a lot of negative sentiment about the effects of the global downturn on the Eastern European economies, however on closer analysis while it’s apparent that these emerging economies will not be able to escape unscathed, there’s plenty to suggest that what may well be represented as a downturn by vibrant emerging economy standards may well represent a significant long term bonanza to the shrewd overseas property investor.
The reasoning is actually quite simple, we’re all expecting to see pretty unimpressive growth figures in our own property market this year, even the most optimistic predictions don’t really manage to gain too much above the current inflation rate let alone representing a solid investment for personal wealth generation. On the other hand the property markets in Eastern Europe we’re at great risk of overheating and the slowdown may well represent a cautious rationalisation rather than spiralling growth followed by inevitable collapse. Poland has been growing at over 6.5% the highest rate in over a decade and a rate that possibly wouldn’t have been sustainable long term. Even with the downturn the majority of Eastern European markets such as Romania, Slovakia, Poland and the Czech Republic are all expected to maintain economic growth levels of around 6%. It’s this solid momentum in growth that should continue to keep the property markets buoyant while at the same time the general global downturn may well take the froth off the property markets slowing them down naturally to growth levels that are far more sustainable over a longer time periods.
The few point slide in GDP growth in these markets will reduce the risk of excessive inflationary growth as wage increases are reduced in order to keep the markets competitive and the economies attractive to foreign investors in all markets. This general rationalising of these emerging economies may well prove a catalysts to a more sustainable long term property market with reduced risk of overheating followed by a dramatic crash.