Sim Property Newsletter Nov 2010 - Spain, Ireland, Bulgaria & Tax

Sim Property provides a full range of property investment and property management services with a primary focus on the markets of Central & Eastern Europe.

Our monthly newsletter is our latest collection of random thoughts and musings on worldwide property investment issues. This newsletter now goes out to over 10,000 people and we appreciate any responses or comments you may have.

This month we look at tax in CEE, the world cup in Qatar, discount property in Spain & Ireland and mortgages in Bulgaria ...

Bulgarian mortgages

There are now tentative signs that the first mortgage products for foreigners are reappearing in Bulgaria (contact us for more information). Whilst interest rates are currently still around 10-14% this is nevertheless much needed good news for the Bulgarian property market.

With prices in Sofia for most properties comfortably under 1,000 EUR/sqm its interesting to surmise whether the reintroduction of finance could help to kick start the market. If this were to be combined with a drop in interest rates to more reasonable levels we could well see a sudden jump in property prices.

In the short term I don't see this happening, however, if Bulgarian banks sort out their balance sheets and start offering more products to locals at better interest rates I believe we could well see a rapid step increase in prices. As an investor if you're able to spot these conditions coming it could provide quite a profitable investment strategy.


Discount property in Spain & Ireland

The problems in various Eurozone countries have been well publicized throughout this year. The principle countries affected are Portugal, Spain, Ireland, Italy and Greece.

From a property point of view the two that really stand out are Spain and Ireland. Their economies were heavily reliant on the boom fueled by cheap credit much of which was pumped into a real estate bubble which has burst spectacularly.

Property prices are still falling in both countries and banks in Spain have already repossessed (and are trying to offload) large amounts of property. This journey is only just starting in Ireland. How far prices will go is difficult to say, however, hungry investors are already lining up licking their lips at the prospect of cheap properties in both countries.

Spain banks are already offering properties at 30% below valuation, 90% mortgages and various other incentives (such as cheap rent to buy schemes) to clear their books of the growing number of properties they now hold.

From an pure investment point of view I still believe it's too early to buy again in Spain and Ireland, however, they will certainly be two countries to watch later in 2011.


Qatar

As Qatar has just been given the opportunity to host the football World Cup in 2022 I have to give the country a special mention in this month?s newsletter.

I'm not sure I'd give an all out recommendation to invest in property there, however, changes to the law now allow for more extensive foreign freehold ownership of property.

Qatar is a small country with a small population of only 1,700,000. Qatar's wealth is primarily driven by its large reserves of oil and gas. Such reserves are likely to be in increasing demand over the next decade making Qatar?s wealth per citizen even greater in the lead up to the world cup. Such conditions are certainly not going to hamper the growth in property prices.


Rebranding

Early this year we rebranded our website from propertyinvestmentinternational.com to simpropertygroup.com.

As part of this rebranding we've also just completed the rebranding of our local real estate agency brand - Sim Reality (eg simreality.cz) is now called Sim Property (eg simproperty.cz).

This means we'll now only be known by one name "Sim Property" across all our different markets and languages.


Tax returns 2010

Around this time of year we often get lots of enquires from property owners that start to think about the need to organize a local tax return. However, there is no rush until the New Year.

In the Czech Republic the income tax return deadline is 31.03.2011 and property tax must be registered by 31.01.2011 if not already done so. Tax rules are similar in Slovakia.

In Poland it's a little more complicated depending on how you?ve been paying tax throughout the year (eg a flat rate or progressive rate). You must choose which method you wish to use in 2011 by 20.01.2011 and the income tax return deadline is 31.01.2011 for the fixed method and 30.04.2011 for the progressive method. It's very important to understand the Polish tax system so that you are not at a tax disadvantage.

In Bulgaria the income tax deadline is also 31.03.2011. However, there is also a 10% withholding tax which is being more rigorously enforced in 2010 meaning foreigners with income in Bulgaria must declare it monthly and pay tax on it in the following month.

For all our property management clients we'll be in touch in the New Year to organize everything in time to meet the various deadlines.

For all other property owners contact us to see how we can help as we have very reasonable rates and specialize in saving property owners tax on their properties in Central & Eastern Europe, for example, last year all of our clients (except one) paid NO tax in the Czech Republic.


If anything over the last 6 months many properties markets in Europe have, unfortunately, weaken as opposed to getting stronger (this includes many CEE markets) and the outlook remains as uncertain as ever.

Next month we'll do an important round up of world property markets, analysis how the world continues to evolve and how this affects your investment strategies.


Regards,
Simon Tweddle.
www.simpropertygroup.com