Traditionally, Brits looking to invest in foreign real estate have concentrated on southern Europe. Property in countries like Spain and France was once viewed as cheap, easy to access from the UK, and guaranteed to provide a good return on initial investment. But booming house prices in southern Europe, coupled with the predicted property slowdown in both France and Spain, has led British buyers to look elsewhere for overseas property bargains.

With the European Union seemingly always looking to expand its membership, a good deal of money is set to pour into countries like Bulgaria, Turkey and Montenegro over the next few years. Not only do places like these represent excellent investments, they also possess stunning scenery, rich historical backgrounds and, in many cases, delightful weather. But just what sort of property bargains can be purchased in some of Europe's less trodden corners?

Bulgaria
With all the hype that has surrounded Bulgaria over the past few years you could be forgiven for thinking that the chance to purchase property bargains in the country is now a thing of the past. However, this is far from the case. While prices in the most popular areas of the Black Sea Coast may have soared in recent years – although, it has to be said, still not out of the price range of a majority of purchasers – there are still many areas where the £15,000 that would have bought you a beachfront property in an area like Sunny Beach as recently as two years ago will still afford you a perfectly habitable Bulgarian home. Anywhere where the tourist industry will flourish is still a bargain area in which to buy, and away from Bulgaria's traditional seaside resorts tourism is only just beginning", explains Phil Grimes of Select Property Overseas.

While the country's ski resorts, particularly Bansko according to Grimes, still offer purchasers reasonably priced property, areas like Veliko Turnovo could also be worth closer inspection. Although Grimes says that this city is yet to become 'investor-friendly', he does point out its increasing popular ity with expats. Veliko Turnovo, located in central northern Bulgaria, is one of the country's oldest settlements and was the nation's capital before Sofia. Its unique culture and varied history – the first traces of human presence in the city dates back to the Bronze Age – is slowly starting to attract more tourists, and this, in turn, could eventually lead to a flourishing property market in the city. At present you could realistically expect to pay as little as £10,000 for a one-storey property located just outside the city.

Should you still wish to buy on the coast, though, new-build property bargains in even the most sought-after resorts can be found for around £40,000, although such developments are becoming increasingly rare. So, yes Bulgaria does still offer plenty of really cheap property bargains, but, advises Grimes, it is important that even the most scrupulous of bargain hunters don't get too wrapped up in how low the price of a particular property is,  especially if they are viewing it as an investment. "Anything is only worth what someone else is prepared to pay for it", he warns. "Investors who find bargains that are 'too good to be true' may find the truth in this statement when they come to try and sell them. "The process of re-selling is an important part of buying and is often overlooked by investors who get caught up with how cheap a property is and don't properly consider the reasons why this is the case. "In order to re-sell an investor needs to find a buyer who has a reason to buy their property at a price that is acceptable to the seller", concludes Grimes.

With Bulgaria set to join the EU by the time you read this – it is primed to be officially declared a member state on 1st January 2007 along with Romania – it is anyone's guess as to how long property prices in Bulgaria will remain so low. But for now, at least, Bulgarian bargains are still very much obtainable.

Romania
It's traditionally known for its poverty and bloody communist history, but in recent years Romania has thrown off a dark reputation and emerged as a shining beacon for investors.

The country has some of the most diverse scenery in Eastern Europe, with a roughly equal division between mountains, hills and lowland territory. There is also a small stretch of coast which borders the Black Sea, and it is this that has so far proved most popular with foreign buyers. The Romanian Black Sea Coast stretches from the protected Danube Delta in the north to the developing holiday hotspots in the south. It is renowned for beautiful fine-sand beaches, low salinity levels and gentle currents. With tourism in the area on the increase, property on the coast is also set to benefit: analysts predict annual capital growth of 7.9 per cent a year from 2007 to 2016.

But some sources advise those after a bargain to look further inland. "We are particularly recommending flats to let in the town of Timosoara if you are looking for a two-fold return on your investment", comments Philippa Weitz of PWTinRomania. "First of all you will have the property value increases, but also you will have your property rental income – rental yields have been as high as 30 per cent, and you can definitely expect to make 10 per cent. "From a commercial point of view, Timosoara couldn't be better placed. It is located at the western end of Romania, and the pan-European highway that is currently being constructed will run from the north of Germany to Turkey, passing the north-east suburb of Timosoara. The highway will make the town western Romania's commercial hub. Demand for property will be high."

However, wherever you decide to buy in Romania your investment should yield a healthy return. A study completed by Price Waterhouse Cooper and Channel 4 earlier this year named Romania as the top investment country in Europe for the next ten years, with an amazing 414 per cent return on investment at the end of this period. "Whether you are a commercial or private investor, whether you are buying to invest or as a holiday or permanent home, there is no time like the present," says Weitz. She advises investors that the best way to pick up a bargain is to use a reputable property agent. "Not all estate agents working in Romania have the level of integrity we believe is important. Before embarking on a purchase the purchaser needs to have 100 per cent confidence in the agency that he/she will be buying through as it is easy to lose money through a poor deal. "Romania is a great place to invest, providing you don't cut corners and providing you use a reputable agency."

Lithuania
When, in October, overseas estate agency Knight Frank revealed its predictions for where the top places to invest in a European property will be in 2007, it wasn't the usual emerging market suspects of Bulgaria, Romania or Poland which topped the table, but the still largely ignored Lithuania.

The southernmost and largest of Europe's three Baltic states – LatvIa and Estonia make up the trio – Lithuania joined the EU in May 2004, but is yet to experience the same level of interest from property seekers that many of the other countries which joined at the same time have. This can be viewed as something of a surprise given that the country was one of the most economically stable of the ten that received EU status in 2004 – it had the highest economic growth rate amongst all candidate and member countries in the year prior to joining the Union. However, this lack of widespread purchasing interest could finally be about to change. "Lithuanian banks currently offer Brits very good mortgage terms and this should make the country increasingly attractive to overseas buyers", says Alistair Day-Stirrat of Someplace Else. "In addition, rental returns are on the increase, and with steady capital growth Lithuania offers foreign buyers all the right investment ingredients", he adds.

It is predicted by Knight Frank that Lithuanian property prices will rise by around 20 per cent over the coming 12 months, causing an as yet unprecedented property boom in the country. However, even if these predictions should become a reality, bargain hunters will still find themselves a long way from being priced out of the market. The average property price in Lithuania currently hovers around the £46,000 mark, and it is still possible to pay less than this amount for a one-bedroom apartment in the country's capital, and biggest property market, Vilnius.

Latvia
As with its southern neighbour, Lithuania, it is expected that Latvia's still cheap property prices will also undergo something of a surge over the coming years, with the capital, Riga, expected to be at the forefront of any such value hikes.

It is estimated by Knight Frank that property prices in the country will rise by an average of 17.5 per cent in 2007, a far higher level than the increase levels expected in already established markets like Spain, France, Portugal and Greece. "The Riga District is still the most popular place for overseas purchasers to invest in", explains Sandra Berzina of Someplace Else. "However, suburbs of Riga have become very popular and a greater number of buyers have purchased there recently. Prices are considerably cheaper and you can expect a decent capital growth as opposed to city centre (Old Town) properties where prices are already much higher and therefore capital growth is a little slower", she adds.

It would appear that Latvian property prices have already started to rise beyond recognition. "Over the last year capital growth in Latvia has been 45.3 per cent and there are no signs yet that this tendency will slow down in the near future", says Berzina. Not that this has done too much to put the price of a Latvian property beyond the budget of most British property buyers. New apartments in Riga can still be purchased for as little as £30,000, while head towards the city's suburbs and prices for similar-sized properties start from closer to £20,000. "We expect property prices in Riga will still have room for growth for at least the next ten to 15 years by which time we expect they will be on a par with other European capital property prices", predicts Berzina.

Estonia
Its recent membership of the European Union has brought Estonia under the gaze of foreign investors. The country is the northernmost of the Baltic states, and lies on the eastern shores of the Baltic Sea directly south of Finland.

Despite its northern latitude, however, Estonia is constantly warmed by the Gulf Stream and so has reasonably mild weather for most of the year. In July, the warmest month of summer, temperatures tend to average around 15oC.

In 2005, the Royal Institute for Chartered Surveyors ranked Estonia as the fastest-growing real estate market in Europe, and in 2006 it is estimated that property prices will rise by around 10 to 15 per cent. Some sources, however, say that these figures should be viewed with caution; a large proportion of the investment is speculative and there is still doubt over how the market will stabilise. "People are investing with the intention of selling on quickly at a profit, and there is some doubt as to who the final buyers will be", says John Howell, author of Buying a Property in Eastern Europe.

But Darren Goodson, author of How to Profit From One of the Biggest Property Booms in Eastern Europe disagrees. "The Estonian market is booming at the moment, and a combination of factors are driving prices upwards", he comments. Goodson identifies a number of factors which are contributing to market growth, including increased foreign investment, a larger tourism industry prompted by the Easy Jet route opened in 2004 and EU funding.

Despite its booming property market, it is still possible to pick up a bargain in Estonia, with prices ranging from £17,000 for a two-bedroom house in a rural area close to Parnu to £228,000 for a two-bedroom luxury apartment in the beautiful capital city of Tallinn. But the best bargains in the country come in the form of the many old houses requiring renovation. For a mere £14,000, it is possible to acquire a delightful country cottage in beautiful surroundings, complete with its own land and outbuildings.

Montenegro
Once the playground of Hollywood stars, Montenegro has been out of favour for a number of years due to its alliance with Serbia. But this summer the little country finally won its independence in a narrow referendum, and is now set to dazzle the international scene again – being used as a key location in the most recent Bond film, Casino Royale, will no doubt do much to aid the country's quest. "Since the referendum there has been a tremendous response among Britons", says Pindo Dinkovski of DPS Estate Agents. "We have had a lot more enquiries about Montenegro." He estimates that in the last 12 months he has seen a 20–30 per cent increase in property prices, as British, Irish, Scandinavian and wealthy Russian buyers have cottoned on to the emerging market. But, with prices on average a third lower than in neighbouring Croatia, it is still possible to pick up a bargain. "For those looking for bargains, the coastline between Budva and Petrovac offer the best cheap investments", says Dinkovski, His views are supported by Jonty Crossick of Ready 2 Invest. "The property market is increasing at 30–50 per cent in coastal regions, where the high mountains close to the sea protect it from overdevelopment", he comments.

Although there are a few purpose-built developments along the Montenegrin coast, the entry-level investor may do better to look at one of the many older properties in this area that require renovation. These generally require some work, but they go for a song and are arguably more attractive than modern multi-builds. "If you're happy to do some renovation work, you can find yourself a seafront property with its own boat mooring from 150,000 euros", says Caroline Hollingworth of Hollingworth and Taylor. "You could even get your own plot of land with a beach from around 100 euros per square metre."

But buyers hoping to pick up a bargain in Montenegro need to be aware that there are problems attached. "The whole buying process is complicated", explains Howell, while the Washington Post points out that the country must deal with the problems of "chronically bad infrastructure and endemic corruption" before it can be considered a reliable investment. There are also doubts about the country becoming an affiliate of the EU. "If people think they are buying into the EU, they are very much mistaken", says David Webb, first secretary at the British Embassy in Belgrade. "If anything, independent Montenegro is further from the EU than 'Serbia and Montenegro' was." But Prime Minister Milo Djukanovic disagrees. "I am convinced Montenegro could be the next country from this region to join the European Union, after Romania, Bulgaria, and Croatia, which are further along the process", he insists.

Poland
Combining a delightful traditional rural culture with modern and vibrant cities, Poland is a great lifestyle choice as well as a sound investment. It is already a member of the EU, and therefore already benefitting from an estimated $13.5 billion of injected capital. Despite this, property prices in some areas of Poland are still among the lowest in Europe, and cities like Warsaw and Gdansk offer a number of excellent bargains, which are guaranteed to accrue capital at a fast pace. "All the ingredients are there in Poland: people, investors, funding and location", says Martin Oxley of the British Polish Chamber of Commerce. "The country is at the beginning of its EU growth cycle – now is absolutely the time to invest in Poland."

According to Assetz property investment experts, capital growth in Poland has jumped by 20 per cent over the last year. The company also predicts a growth rate of between 20 and 30 per cent per annum over the next few years, making the country an excellent short-term investment. 

Kate Godfrey, head of research at estate agents Property Frontiers, recommends Gdansk as a potential investment hotspot. "It has a beautiful old town, in the same sort of unified style as Dubrovnik in Croatia, built around a port and it is an easy walk from the town centre to the beach", she says. "In May 2005 Ryanair opened up cheap flights to Poland with daily flights from London Stansted to Gdansk."

The country's capital city, Warsaw, is also a good choice, boasting average property prices which are among the lowest in the country, and the recent introduction of major industry drawing a young a wealthy crowd. Typical prices start at £40,000 for a one-bedroom apartment. Investors in these areas will benefit from the massive shortage of property in Poland – a problem which is estimated to take approximately ten years to rectify. Rental properties are, in consequence, very much in demand, and rental yield is high. Buyers can take advantage of the managed new-build apartments which have been constructed for the local rental market.

Czech Republic
This landlocked country is steeped in cultural history, and boasts some of the most impressive architecture in Europe. The capital, Prague, is on a par with cities like Rome and Venice for sheer beauty and appeal, and the magnificent Czech countryside exerts a perpetual draw to cyclists, ramblers and landscape connoisseurs.

Although property prices in Prague are higher than most places in Eastern Europe, it is still possible to acquire a bargain – a one-bedroom apartment in a new development can be as cheap as £50,000. A property in Prague is also a reasonably good investment – prices are expected to rise by 7–9 per cent over the next 12 months – although most people who buy there now do so primarily for the atmosphere and lifestyle.

The best places to find a bargain investment, however, are outside the capital. Brno is the second-biggest city in the Czech Republic, and recently won the competition for European City of the Future 2004/2005. Property prices there rose by 18 per cent in 2005, and are estimated to increase by 25 per cent in 2006. "Brno's fast economic growth and high GDP-per-capita has helped push it above other cities in the region", says Tomas Bohrn, Project Manager at CzechInvest. Other factors that will continue to boost property prices in the city and attract foreign investors include the relatively recent Ryanair route between London and Brno, and the completion of the motorway in 2008 which will link central-northern Moravia with Poland, making the whole area more accessible for investors and companies.

Another Czech investment hotspot that buyers should consider is Ostrava. Moody's Investors Services have recently given the city an 'A3' grade (indicating that the financial and fiscal health of the community is rated at medium-high), and Ostrava is currently undergoing an economic revolution which is sure to boost its property values. "Since the restructuring of industry in the 1990s, the economic platform of the city has changed substantially", says Nathan Brown of Czech Point 101, a business which helps buyers find homes in the Czech Republic. "Most of its incomes are now no longer solely dependent on [domestic] economic conditions."  Demand for rental property in Ostrava is also high, with an increasing tourist presence and two local universities. And with a combination of architecture to rival Prague and beautiful natural surroundings, the city is a perfect place to holiday as well as to invest in.
 
Hungary
Although property prices in Hungary are no longer rising at the meteoric rate seen between 1999 and 2003, the country is still a popular choice for investors. Growth has steadied in recent years at around 15–20 per cent, with rental income potentially as high as 15 per cent. If that isn't enough of a reason to consider putting your money into Hungary, then you have only to look at the bargains available. "When you consider that Hungary has one of the wealthiest and most stable economies in Eastern Europe, it is exciting, not to mention hugely financially rewarding, being able to buy a brand new luxury apartment there for less than £28,000", says Crossick.

Unlike countries such as Montenegro, Hungary's stable economy means that it is also a relatively safe investment. Its economy is underpinned by a diversity of wealth-creating sectors, which will hopefully allow the country to grow towards convergence with richer EU countries.

So whereabouts in this country can you find a bargain with investment potential? Martin Padfield of Hungary Property advises buyers to look at the capital, Budapest. "Budapest has the lowest cost of living of any major European city, which is reflected in its property prices", he says. "Incredibly, prices are still lower that in comparable European cities like Prague – but I can't see it staying that way for long." "Picture Ireland and in particular Dublin ten years ago", comments Crossick. "This is what Budapest is widely believed to be like at present. On average, the price of a property in Dublin today is more than double the Hungarian equivalent."

And not only is Budapest a treasure chest of architectural and cultural delights, it is also extremely accessible; Easyjet and Wizz Air both fly into the city, and travel between the UK and Budapest can cost as little as £18. It is possible to acquire a high-standard apartment in prestigious areas of the town like District 3 and District 13 for a comparatively laughable £23,000, while £40,000 will buy you a luxury apartment on the Buda side of the river, the city's equivalent to Chelsea.

And there are other advantages to buying in Hungary – it is as straightforward as buying a property in the UK, says Padfield. "The biggest difference is that while the UK market has levelled out, Hungary still has years of growth ahead."

Turkey
Despite having been a massively popular hot-spot for British tourists since the early 1990s, it is still possible to purchase property along Turkey's sun-drenched Aegean and Mediterranean coasts without doing too much damage to your wallet. "The property market [in Turkey] is still relatively young having only been active for some four years or so now", explains Grahame Clist of Gascoignes International. "As a result property prices are still low compared to those in Spain, Cyprus etcetera, and the general level of new build quality is good with many improvements having been made over this period", he adds.

However, it should be noted that finding really cheap Turkish property is not as easy as it once was. In 2004 property prices in Turkey rose, on average, around 30 per cent, even doubling in some of the more popular locations. Similar rises are expected to have occurred in some areas of the country throughout 2005 and 2006 as well, while persistent speculation linking Turkey with possible EU accession should keep capital appreciation levels ticking over at around the 8–10 per cent mark for the foreseeable future. It is important to note, though, that the dispute surrounding Turkey and EU membership is not likely to be resolved any time soon.

Despite these price rises, new build two-bedroom villas in some of Turkey's most popular coastal resorts, including Fethiye, Bodrum and Alanya, can still be found from around just £60,000, while new apartments can be purchased for less than £40,000 in areas such as Altinkum, Side, and Istanbul – which recently began receiving thrice-weekly flights from the UK thanks to Easyjet. 

For those who are looking for a more 'traditional' Turkish property, large old villas in need of renovation still can be picked up in the most popular coastal locations for as little as £25,000–£30,000. While prices this low certainly fall into the 'bargain basement' category, it is important to remember that the build quality of many older properties in Turkey will be nowhere the quality you will be used to in the United Kingdom.

Clist is certainly wary of such low-priced property. "I am always suspicious of bargains, they usually come at a price", he says. "However, good value is still to be had in many areas and some developers are offering great incentives to buy, with schemes like guaranteed rentals, discounts, [lower] opening offers, etcetera. "Each area has its benefits and 'you pays your money and takes your choice' according to whether you want pure investment, holiday or permanent living", adds Clist.

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For further information:
Assetz 
BPCC
Czech Invest 
Czech Point 
DPS 
Gascoignes International 
Hollingworth & Taylor 
Hungary Property 
Knight Frank 
Property Frontiers 
PWT in Romania 
Ready2Invest 
Select Property Overseas  
Some Place Else
Tallinn Property 

Article published in December 2006