Here Comes Booming Bratislava

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Though the property markets in Spain, Ireland, Britain, and the United States are reeling after years of interstellar growth, Slovakia's real estate boom shows little sign of abating, even though price increases have cooled. After a huge spike in purchases last year, investors have slowed transactions in preparation of Slovakia's transition to the euro in January, said Marik Lazik, the secretary general for the National Association of Real Estate Offices of Slovakia. "Investors are waiting to see what will happen."

He added, however, that economists still expect Slovakia's market to continue to expand. Now that Slovakia's borders have been raised, investment will likely only diversify and expand.

"Slovakia's entry into the Schengen zone helped to beef up the business environment in the country, as it made foreign investment influx much easier," SARIO spokeswoman Jana Murinova said.

THE FINAL FRONTIER

The bullish economy has had a particularly potent effect on real estate beyond Slovakia's borders. With property prices in Bratislava reaching new heights, residents have turned to Austria and Hungary to get more value for their money. Although Slovaks began buying up Austrian and Hungarian real estate as soon as talk of joining the EU began, Lazik talks of a new era of expansion.

"Schengen was only the last step," he said. "It was the last barrier, and now there is nothing stopping development."

Now that Slovakia has joined Schengen—and the final literal and metaphorical roadblock for buying property in Hungary and Austria has been removed—the benefits for many Bratislava residents have become undeniable, said Ratislav Oravec, an agent for Rajka Real.

Rajka is a good example. The town is surrounded by vast expanses of grass and crops. Because of this rustic backdrop, it feels hours away from bustling Bratislava, but is a mere two kilometers from the nearest city bus stop.

Oravec estimated that property values have tripled since 2000. Now, Rajka has nearly become full. "The mayor released 20 plots of new land for sale—and 500 people have already applied," he said. "Currently, property in Rajka is being bought purely by Slovaks."

Of the city's residents, Oravec said nearly 800—or about one-fifth of the population—are Slovak, many of them young professionals. This percentage is a vast change from a town that, very recently, was composed entirely of older Hungarian families. "There is really starting to be a big community of Slovaks," he said.

INTERNATIONAL SPRAWL

Before Schengen, Bratislava property development could only expand north and east, because it was boxed in by its borders with Austria and Hungary, even though Bratislava's city center is only a few kilometers from the Austrian border.

Lavic, standing next to a giant map in the NARKS boardroom, circled a region in Austria directly west of Bratislava's city center. "You see, a quarter of Bratislava is missing," he said. "And developers are already introducing plans to build this missing part."

He added, though, that the planning was in the very early stages, and would require political and planning approval in Austria.

Except for a string of villages, the area close to the Slovak border is largely undeveloped farm country. For many years, the Austrian region was considered less desirable because of its proximity to the Eastern bloc. Now, Slovak residents are taking advantage of this gap.

Konstantin Bekos, the commercial counselor for the Austrian Embassy in Bratislava, said Austrians generally approve of the development of the region and he expects it to continue. "It's an arithmetic question," he said. "On the one side, you have a 500,000-person city, and on the other side, you have just small villages and towns. You have a disparity in prices between the areas, and therefore, of course, you will have an exchange."

Commute times from Austrian and Hungarian border towns will only get easier in the future, Oravec added. A Bratislava city plan has slated the construction of a sixth bridge across the Danube and a new highway circling the city, which will decrease driving times across the borders. Frequent rail connections already link Vienna and Bratislava—Europe's two closest capitals.

NOT IN MY BACKYARD

Though investment firms and residents alike generally praised the rapid development in Bratislava and it suburbs, not everyone is thrilled.

In some of the newest development complexes, speculative investors have pushed out smaller buyers, causing prices to rise without a benefit to normal residents. And in a few of the city's electoral districts, citizens have begun to complain about crowding or the destruction of historic buildings in order to make way for formulaic commercial structures.

Iveta Hanulikova, the mayor of Bratislava's Karlova Ves district, has publicly objected to the development in her area and threatened to put the brakes on construction projects; other district mayors have voiced similar concerns.

And though most villages welcome Slovaks enthusiastically, there are those skeptics who worry that there's too much of a good thing.

"These are villages, so they're happy to be getting new blood, but I also think they're a little wary of this becoming another Slovakia," Monika Haklova, owner of the Bratislava-based Universal Development, told the Slovak Spectator.

Still, Fassingerova of the Rajka Hotel insisted that Rajka and the surrounding villages had few complaints about the Slovaks moving into their communities.

"It's not viewed negatively. Many [Hungarians] are happy that Slovaks are buying their property," she said. "It has always been a border area, so people are tolerant."

Several hundred meters from Hungary, a former border-crossing station sits abandoned near empty flaxen fields, a busy international highway—and not much else. With Schengen, the checkpoint lost its purpose, and it looks as if its workers deserted mid-shift: in glass booths where drivers used to show their passports, papers still lie along desks and empty soda bottles lean against the wall.

But if developers and property-hunters have their way, this relic of the recent past won't remain in isolation for long.

"It is expected that [property] development will soon reach the Hungarian border," Oravec said.

Bratislava's rapid expansion has yet to create a backlash among cultural or national purists. The biggest reason is probably the simplest one: money. Though some village mayors are cautious, as in Rajka, about over-developing their region, in general politicians have tentatively endorsed this new era of international development, citing the potential for economic benefit.

To Bekos at the Austrian Embassy, such goodwill is unsurprising.

"Austria, Slovakia, and of course Hungary—these three countries are politically very connected," he said. "There is no political friction between these countries. And so, economically, we expect very strong integration to continue."

Provided by Transitions Online—Intelligent Eastern Europe