Just when you think the last word has been said on new property hot-spots, the phrase 'emerging markets' rolls onto the scene and a fresh crop of countries rolls out with it.

Europe's property scene has changed dramatically in recent years with the expansion of the EU, but European countries outside the EU are also jumping into the market place – all of which gives the British investor a range of interesting possibilities. Emerging markets across Europe are similar in that they all tend to offer property that is cheaper than in the established markets of Spain, Portugal and France. However, there are also differences between them, for example, in some countries mortgages are available to foreigners while in others you must set up a company in order to to buy land.
 
The key questions to which you will no doubt want answers are, how long will the prices continue to go up? and will the economies of the emerging market countries catch up with the established markets and reach a more appropriate level sooner rather than later? Whatever the answers, this is one train ride that you really don't want to miss. All aboard…

BULGARIA
Bulgaria has firmly established itself as one of, if not the major, emerging property and investment market in Eastern Europe, mainly thanks to one key point – it is cheap, very cheap. "Prices for good studio and one-bedroom apartments start at 45,000 euros and go up to around 140,000 euros", says Michael Johns, of The Right Move Abroad. "Two-bedroom apartments start at 60,000 euros and can go up to 370,000 euros depending on the property's location and facilities", he adds.

Money aside, another of Bulgaria's main advantages over some of the other countries in the eastern tracts of Europe is that its infrastructure was already well geared for tourism before Brits became interested in the country. This is especially along the Black Sea coast – once the established summer holiday destination for residents from countries in the Eastern Bloc.

So, when the fall of the iron curtain opened up previously out-of-bounds corners of Europe to Brits, Bulgaria's coastline was immediately one of the most popular areas for the new wave of holidaymakers. And where holidaymakers go, property buyers tend to follow. The coast is now very popular with buyers looking for an investment property – either capital appreciation or rental – or a holiday home. However, Bulgaria's coastal properties are not the only ones in the property spotlight. Its capital, Sofia, and the ski resorts located in the country's mountainous west, have also attracted considerable attention, with Sofia viewed as an ROI destination, and the ski properties catering to investors and second-home seekers.

With the country due for EU accession in 2007, interest is likely to grow rather than subside. However, while it would appear that some eastern European markets have only just begun to flourish, those in search of Bulgarian bargain better be quick. "Property prices across Bulgaria have risen by an average of 20 per cent over the last three years, including a 31 per cent increase last year", says Tony Beecroft of the Bulgarian Property Centre. "I predict that prices across the board will continue to increase by about 25 per cent over the next few years and then there will probably be a slowdown in prices."

But while this may affect your ROI potential, with more British tourists annually discovering the delights of Bulgaria's coastal and ski resorts and with a chance that the country will host the 2014 Winter Olympics, it is unlikely buyers will be short of rental clientele for some time to come.

For further information on property in Bulgaria:
Bulgarian Property Centre

ROMANIA
Although it shares a border with Bulgaria, Romania has not yet enjoyed the attention of international property investors that has set apart its Balkan neighbour. Yet it has much to recommend it to those buyers who are piling their money into Bulgaria. The two countries share the same coastline along the Black Sea – of which Romania lays claim to 244 kilometres. The same countrywide variety is also evident – coastal resorts, spas, ski resorts (in the Carpathian Mountains) and historic cities. And, like, Bulgaria, the entry level for property is extremely low – even by the standards of the other 14 destinations featured in this article. Indeed, 14,000 euros is enough to get your foot in the door.

For those with an eye on the Black Sea coast, Constanta, Mamaia and Eforie Nord are the most established resorts. Here, where average temperatures in June, July and August are above 20°C, 45,000 euros will get you comfortably on the first rung of the property ladder, while villas are available from 70,000 euros. In Bucharest, perhaps not the most attractive of Eastern European capitals, head for the outskirts and you could pay just 5,000 euros for a viable buy-to-let property.

In the east of Romania, Timisoara – 'The City of Flowers' – is another option for urban investors with more modest budgets. Says Philippa Weitz of PWTinRomania, which has teamed up with an agent in the city: "Timisoara is developing rapidly, combining beautiful historical buildings with commercial and academic and technological developments. "Within the city excellent investment opportunities exist for apartments in historical buildings and land on which to build." Within easy reach of Timisoara, tourist areas in and around the mountains are beginning to attract holiday-home buyers. Now, with the ball finally rolling, property price rises of 25 per cent this year and a total of 80 per cent in the next three have been predicted by some market analysts. Despite the paperwork challenges often involved in buying property in Romania, this could be a small price to pay for a stake in a country that's beginning to show its teeth in the international property arena.

HUNGARY
While landlocked Hungary may not have the coastal resorts on offer in some of Europe's emerging markets, what it does have is one of Eastern Europe's most beautiful capital cities. Known as 'the Paris of Eastern Europe', it is no real surprise that Budapest has been the driving force behind the Hungarian property market's increasing popularity among British buyers. Of course, the fact the country has one of the strongest economies and best infrastructures outside of Western Europe has also played a part in propelling its reputation. "Stability is one of the most attractive factors for British buyers", says Martin Padfield of Hungary Property "While some of the other newer destinations could be considered somewhat risky, this is not the case with Hungary." Hungary, and Budapest in particular, was already well on its way to establishing itself as a popular overseas property destination before it gained accession to the European Union last May. And while this interest has pushed up prices - by around 20 per cent a year in most areas, according to Padfield, investors should still expect to see a return for their money. However, with prices for two-bedroom properties in Budapest starting from around 100,000 euros, property does tend to cost more there than in other Eastern European cities.

Cheaper property can be found away from Budapest in the up-and-coming Lake Balaton area of the country, 80 kilometres southwest of Budapest. Here, prices for a two-bedroom property start close to 50,000 euros, although while prices are set to increase by similar amounts to those in the capital, letting your property could prove to be more of a challenge.
 
For further information on property in Hungary:
Hungary Property

SLOVAKIA
After years of turbulence with its former other half, the Czech Republic, Slovakia is finally enjoying more stable times. The scenic, densely forested country is attracting more and more tourists each year, who head for the Tatras Mountains and the many picturesque and historic settlements. This international attention, due partly to Slovakia's economic reforms, has caused the country's economy make a turnaround that has seen it compared to Ireland and Hong Kong, says Valerie Power of Eastern European Properties. "Huge inward investment  has helped to drive the property market." She says the country's capital, Bratislava, has much to offer property investors. "Location is crucial: Bratislava is only 45 miles from Vienna, and the abolition of final border controls in 2007 – along with the opening of a new motorway, will definitely increase the profile of the Slovak capital." Powers adds that quality apartments are high demand, which are creating a "very interesting" rental market. "Property investors can expect yields in the area of Stare Mesto (Old Town) of between eight to ten per cent."

But it's not all plain sailing. "The biggest barrier to investors is sourcing quality apartments – as they are quite rare in this area", says Power. With the property market completely open to foreigners and with no stamp duty and a flat rate of 19 per cent for just about every tax, there are good deals to be found. "A budget of 100,000 euros will secure a well-located two-bedroom apartment", advises Power. The average price for a two-bedroom house in Bratislava is 100,000 euros. A two-bedroom house costs, on average, 160,000 euros, and for three bedrooms you will pay 210,000 euros. In the Tatras Mountains, the average price for a two-bedroom house is 50,000 euros, a three-bedroom house 60,000 euros and a four-bedroom house 120,000 euros.

For further information on property in Slovakia:
Invest Slovakia 

CZECH REPUBLIC
With its medieval towns and castles, sprawling forests and quaint country villages, the Czech Republic has been the focus of European property hunters for years, but Brits are only just realising this market's potential. Although as a nation it is a fairly new arrival, the Czech Republic is making a name for itself as one of the most developed and forward-moving countries in Eastern Europe. Having discovered this, British property buyers are homing in on the country's investment opportunities, with most opting for modern one- to two-bedroom apartments with letting potential, according to Jakub Kotan, of KotanGuard Overseas Estates. "About ten to 15 per cent of our clients use their Czech property as a first or second home destination. Centrally located apartments and commercial units in Prague and other major cities generate income covering 75 to 80 per cent of a mortgage," he says. Kotan goes on to say that, although small towns such as Brno, Karlovy Vary and Ceske Budejovice would give property investors a high capital growth "rather than sky-scraping rental income", Prague's central-city apartments, commercial properties and large pieces of land outside the city are still the buyer's favourite – for the time being. "My personal estimate would be that Prague is going to peak in about six to eight years. Other major cities are a little behind and one may expect them to grow for a little longer than Prague", says Kotan.

Overall, the Czech Republic's property prices have increased by 13 per cent each year for the last three, and Kotan expects the upward trend to continue. "Property prices in some attractive locations in the Czech Republic are rising by 30 per cent per annum. The prices need some time to catch up with their western counterparts so the trend should remain unchanged for the next three years." Kotan also predicts that the introduction of the Euro in about three years time will see prices "instantly" jump by five to eight per cent.

Currently, for under 50,000 euros, you could buy a one-bedroom apartment in central Prague, a modern one-bedroom house in Brno or countryside houses throughout the Czech Republic. For 51,000 to 100,000 euros you could find a modern one-bedroom house in central Prague, a modern two-bedroom house in central Brno or a multiple-bedroom countryside home. A luxury riverside penthouse or country mansion with ponds would only cost 151,00 MVDH0–200,000 euros.

For further information on property in Czech Republic:
Kotan Guard

POLAND
Despite being the largest of the ten countries to join the EU in 2005, Poland is unlikely to spring to mind as a destination in which to own a property. However, if it's investment that stirs your interest then Poland may just be worth considering. "The larger cities in Poland, especially Warsaw [its capital], currently represent one of the best opportunities in Europe for both rental income and capital gains", says Peter Morris of Ober-Haus. "In some areas property prices have risen between 40 to 50 per cent since 2003, and although you can never predict when a cycle will turn, I expect the average capital growth to exceed around ten per cent a year for the next ten", Morris adds.

Despite the recent hikes, property is still affordable. Morris says that for under 50,000 euros it is possible to purchase a two-bedroom flat in the centre of Warsaw, albeit requiring renovation, while for around 100,000 euros a brand new one-or-two-bedroom flat with parking will be within your budget. And investment opportunities in Poland are not confined to Warsaw. With low-cost airlines opening up tourism in Krakow, a blend of historic buildings and modern culture, and Gdansk, vibrant but with an industrial edge, similar price increases to those in the capital could soon be in evidence there, too. And for those considering the high life, interest is also being shown in Zakopane – Poland's premier ski resort. Morris has the following advice for those looking to maximise the rental potential of their property. "Target the local Polish market and not expats", he says. "Young professionals will pay 250–500 euros in rent per month, so you can expect yields of seven to nine per cent."

For further information on property in Poland:
Ober-Haus

LITHUANIA
If one of the three Baltic states has gained most from EU membership, it's Lithuania. Bettering the economic growth of even Latvia and Estonia, and indeed the whole of Europe, in 2003, the Lithuanian economy has forged ahead in the past two years. Unsurprisingly, where the economy in general has gone, the property market has followed, with suburban properties along the cobbled streets of the Old Town in Vilnius, the capital, jumping up to 20 per cent in price in the last three years, while apartments in the centre have doubled even this rate. For this reason, says Raymondas Reginis of Ober-Haus, "Lithuania primarily is seen as an investment destination. Few investors purchase the property for their own use. Profit from rentals is also a factor." Currently, for up to 50,000 euros, you could buy a two-to-three bedroom old construction apartment in the suburbs, while for between 50,000 and 100,000 euros an old apartment in a prestigious apartment block or a new apartment could be secured. However, Reginis believes that most residential property in the city "falls between 150,000 and 200,000 euros."

Outside Vilnius, other big cities, such as Kaunas and Klaipeda, also attract investors, as do smaller cities with unique appeal. When it comes to predicting property price moves in the short-term, though, Reginis hedges his bets. "It depends on the two factors. Firstly, supply and demand. Presently, the latter outstrips the former – but this could change. Secondly, there is strong economic growth, friendly mortgage conditions and financial optimism. If this remains the same, we'd expect similar price rises in the next three years."

LATVIA
An EU entrant in 2004, Latvia's property market is driven by its capital, Riga, which is the biggest city in the region and a historic and architectural gem. "Although many people are initially interested in Latvia due to the excellent capital growth potential, it is one of the few countries in Eastern Europe to offer a strong rental market", says Ben Mason of Someplace Else. With property prices having taken off in the city over the last year, Mason believes that: "If you pick the right properties in the right location then it should be possible to achieve 25 per cent appreciation a year for the next two years, slowing to the ten–15 per cent range in the next three years." On top of this, rental yields could be in the region of 10-12 per cent per annum. Currently, new-build, one-bedroom apartments within ten minutes of the city centre start at 30,000 euros. For a two-to-three bedroom apartment in a new development five-to-ten minutes from centre of Riga, or a one-to-two bedroom apartment in a period building in the city centre, in need of some modernisation, expect to part with 50-100,000 euros.

Also of note is the Jurmala ('seashore' in Latvian), a stretch of Latvia's 500 kilometres of Baltic coastline, which is just 45 minutes from Riga. Here, painted wooden houses sit elbow to elbow with holiday villas, all of which is backed with pine forests. Property prices here are, on average, considerably higher than in Riga, with a three-bedroom house available for 200,000 euros.

For further information on property in Latvia:
Some Place Else 

ESTONIA
Not unlike its southern neighbour Latvia, Estonia's economy is growing fast following EU membership in 2004, and property prices in its beautifully preserved Medieval-era capital, Tallinn, are heading upwards, too. As with Riga, though, the entry level is comparatively low, with 30,000 euros securing an apartment in a suburb 20 minutes from Tallinn, or even a detached house with land needing some modernisation in the countryside 30 minutes to an hour from the city. For a small apartment in the city centre, a budget of some 50–100,000 euros will be needed; add an extra 50,000 euros on that figure to obtain a far more spacious apartment. As with the other Baltic states, demand has outstripped supply in recent months, but the latter is expected to catch up with the former late in 2006, at which point property prices could stabilise.

RUSSIA
Moscow is a vast metropolis like London or New York, which is currently experiencing an economic boom. "With a population of 15 million, there's no shortage of potential renters", says Guy Eames of Mos Property. "It's an exciting time, with many of the older buildings being modernised and even some grand pre-revolution buildings being refurbished. Three-bedroom flats in Moscow are available for 150–200,000 euros, although many are still for sale in US dollars, which is a great advantage for British purchasers at present", he adds.

One of the hottest tips is the property available on the Black Sea coast, where there are holiday homes, hotels in popular resort areas, and land for sale. Small houses on the Black Sea are available for 100–150,000 euros. "Overall, prices have risen by 300 per cent in the last three years, with future increases still expected, despite a levelling off to a current growth of approximately 0.5 per cent per month." Rental yields are also favourable, with typical returns of 8–12 per cent in Moscow. However, maturity of the market is still some way off. "Local mortgage rates are currently at 11 per cent and these will need to come down", says Eames.

For further information on property in Russia:
Mos Property 

CROATIA
With the unrest of the 1990s now far behind it, Croatia has been coming into its own over the past few years. Slowly but surely it is becoming a place for Brits to holiday in once again, and beyond this, to invest in. As a result, property prices have been rising steadily for the last 15 years, and not so steadily since early 2003 after it became popular with British and Irish buyers.

Amar Sodhi of Avatar International says Croatia's point of difference for buyers is its "unique beauty, which singles it out not only as an emerging market but also in comparison to any other European destination". As a result, although Croatia currently has more immediate potential for rental income, most buyers still buy property for the lifestyle rather than an investment. For this reason, says Sodhi, most buyers are interested in the Southern Dalmatia, from, and including, Dubrovnik to Split and the islands in between, but he adds that: "There is also some potential on the Istrian peninsula in resorts that can easily be reached from Trieste (Italy)." Unfortunately, though, buyers have to dig comparatively deep for a piece of Croatia, which does not have a particularly liquid market. Sodhi quotes Croatia's average property price as 80,000 to 150,000 euros but thinks that many properties are overpriced. "Certain areas that attracted sudden demand from Brits, such as Peljesac Peninsula, have nearly doubled in two years."

In Omis, Southern Dalmatia, a central-city loft apartment, 50 metres from the sea, costs 70,000 euros. In nearby Mutogras, a villa with private beach costs 460,000 euros. In Dubrovnik, a three-bedroom apartment with sea views costs 220,000 euros, while a luxury furnished apartment with views of Dubrovnik's Old Town and Lokrum Island costs 960,000 euros. Sodhi expects prices to continue a steady upwards trend, especially resort areas once Croatia joins the EU in 2007. He does, however, wonder how high the Croatian property market will go [peaking when], but has no doubts that there will always be willing buyers.
"The country attracts a more cultured clientele with a requirement for a higher level of accommodation, which they are prepared to pay a premium for." However, many are finding the buying process a bit of a drag: "at present, clients buying in their own name may have to wait for more than six months for approval from the Ministry of Foreign Affairs".

With its EU membership likely to be less than two years away bringing with it the possibility of low cost airlines, Sodhi advises speculative buyers to look at property around airports. But he advises buyers not to be swayed solely by what he calls "the EU factor", which has caused countries acceding to the EU to experience considerable price increases. "I think there is a danger in investing just because a country is joining the EU. The main factor about Croatia is that it is an established holiday destination with a good climate and attractive coastline."

For further information on property in Croatia:
Avatar Croatia

MONTENEGRO
Prospective buyers have only just started to test the waters of this small, coastal country, which remains largely undiscovered by western Europeans. But it could definitely have potential, at least according to Amar Sodhi of Avatar International, "if and when it starts to attract a higher number of visitors". Those buying in Montenegro at the moment are only doing so for the lifestyle choice, he says, and most head for the north of the country, close to Dubrovnik airport in neighbouring Croatia.
 
Despite its apparently anonymous showing in the popularity stakes, Montenegro's property prices are still somehow managing to rise – by 50 per cent in the last year, reports Sodhi, as buyers, including Brits, suddenly took interest in the area. Property now costs in the 60,000 to 100,000-euro range. In the beautiful coastal town of Herceg Novi, a two-bedroom house costs about 27,000 euros, while a four-bedroom villa is 270,000 euros, while in the town of Perast, located on Boka Kotorska bay at the foot of Montenegro's mountains, a one-bedroom apartment in an old stone house costs 70,000 euros and a four-bedroom house with views of the sea and two islands is 324,000 euros. Looking to the near future, Ben Mason of Someplace Else picks Montenegro as one of the key emerging markets. "I think that if you pick the right properties in the right locations in Montenegro then it should certainly be possible to achieve 25 per cent appreciation per year for the next years."

For further information on property in Montenegro:
Avatar International
Some Place Else

SLOVENIA
With some of the best alpine scenery in Europe and with property prices that offer definite value for money, Slovenia is one of the latest Eastern European destinations to be on the lips of discerning property investors. "The main reasons for purchasing in Slovenia are  idyllic locations and the fact that you will have a multi-seasonal asset", says Frances Sargent of Slovenian Properties. "In certain areas, especially around Bled and Kranjska Gora, property will always be in demand because of its excellent location.  "Personally, I think that Kranjska Gora, Mojstrana, Bled and Bohinj are gilt-edged locations because of their easy accessibility, limited amount of available property and abundant sporting facilities."

Interest in Slovenia has increased greatly in recent months, and options are developing all the time. "Future trends can be difficult to predict, but I would suggest that new builds in Ljubljana [Slovenia's capital], cottages around the Maribor area and multi-purpose flats and houses around Kranjksa Gora, lake Bled, Bovec and Postojana are all possibilities for increased interest", says Sargent. "According to our agent in Bled, prices rose between 15 per cent and 30 per cent in the area last year", Sargent says, adding that prices across the board could rise by 50 per cent in the next three years. At present, you can purchase a new build one-bedroom apartment in Ljubljana for 131,531 euros.

For further information on property in Slovenia:
Slovenian Properties 

TURKEY
With a summer climate comparable to Spain but with far cheaper property prices, it is perhaps no surprise that Turkey, for so long a popular British holiday
destination, is starting to make its presence felt in the overseas property market. While a majority of the increased interest in Turkish property can be attributed to the purchasing laws for foreign nationals being made more lenient in 2003, location, too, has been an important factor. Turkey's overseas property market is concentrated in the south-west of the country, around its Mediterranean and Aegean Coasts, and despite the country's extreme eastern location – it actually spans two continents, Europe and Asia – the areas favoured by Brits are very much west European in make-up. "Areas like Bodrum, Altinkum and Kusadasi are the leading locations for property buyers", says Toygar Ozguler of the Turkish Property Centre. "These resorts have traditionally been popular with western holidaymakers and when the law changed there, many decided to purchase property."

The recent change in the law effectively means that the Turkish property market is still very much in its infancy, but already prices are booming. According to Ozguler, prices have risen by around 25 per cent in the past three years and he expects an increase of around the same amount for the next three years. Not that figures such as these should put you off purchasing there as properties are still very affordable. "For between 50,000 to 100,000 euros you will be able to afford decent apartments in Bodrum and Kusadasi, while for in excess of 100,000 euros you will be able to afford villas", Ozguler says.

At the moment Turkey is mainly a second home destination, although the rental market is still in its infancy. However, with an eight-month holiday season, talk of year-round charter flights servicing Turkey in the near future, and ongoing discussions regarding EU membership, it may not be too long before more investment buyers start to eye developments in the country with greater interest.
 
For further information on property in Turkey:
Turkish Property Centre

NORTH CYPRUS
Since the opening of border controls, North Cyprus is welcoming new businesses and waking up to the opportunities of an emerging property market. Despite the often negative views aired about the area, North Cyprus has a wide variety of properties and locations where it is possible to purchase a second home, or take advantage of investment and rental potential. In fact, 18 per cent of the land of North Cyprus is available to be built upon without incurring any of the issues surrounding whether Turkish or Greek Cypriots own the land.

Among the leading locations are Esentepe, 20 minutes east of Girne (Kyrenia) on the northern coast and only 20 minutes from Ercan airport, and Bellapais. "All surrounding villages to Girne, such as little hamlets like Alsancak, Catalkoy, Lapta, Ozankoy and Karsiyaka, all offer the residential market a wide array of property", says Mark Unwin or Unwin Estates. "And a possibility for the future is Tatlisu, which is approximately 25 minutes drive east of Girne", he adds. A three-bedroom apartment with a shared swimming pool on the outskirts of Girne is available for between 51,000-100,000 euros, or for up to 150,000 euros near Girne you can purchase a three-bedroom villa with a private pool.

For further information on property in Northern Cyprus:
Unwin Estates

Estimated flight times from the UK
Hungary: Budapest 2 hours
Slovakia: Bratislava 2 hours 15 minutes
Czech Republic: Prague 2 hours 15 minutes
Serbia and Montenegro; Belgrade 2 hours 30 minutes
Croatia: Dubrovnik 2 hours 45 minutes
Lithuania: Vilnius 2 hous 45 minutes
Estonia: Tallinn 3 hours
Latvia: Riga 3 hours
Slovenia: Ljubljana 3 hours
Romania: Bucharest 3 hours 15 minutes
Bulgaria: Sofia 3 hours 20 minutes
Russia: Moscow 4 hours
Turkey: Istanbul 4 hours
Northern Cyprus: Larnaca 4 hours 30 minutes

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Article first published in February 2006