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Property Investment in Macedonia 2008

The Former Yugoslav Republic of Macedonia is emerging as a nation with strong potential for overseas investors to earn high profits on property investment, with tax rates falling and tourism growing steadily.

A series of initiatives have been launched, both at the governmental and ambassadorial level, to help open up Macedonia to tourism, and attract international investors to this beautiful country. Tourism numbers have grown impressively over recent years. During the period January to October 2007, according to the State Statistical Office of Macedonia, tourist numbers increased by 6.8% and overnight stays increased by 5.3%, when compared to the same period of the previous year. The country’s growing popularity as a tourist destination was underlined by the fact that neighbouring Bulgaria named Macedonia as the most desirable destination in 2006. Such ballooning popularity will naturally be reflected in a rising demand for property, driving up capital gains and rental yields.

"Overall, the Macedonian property market has shown an average annual growth of around 9%."

For such a relatively new state, Macedonia has a strong and steady economy, with average inflation estimated at 3.2% for 2007, and a very stable currency. Personal and corporate income tax was reduced to a flat rate of 12% in January 2007, with a further reduction to 10% proposed in 2008, creating one of the lowest corporate tax rates in the world.

The government of Macedonia continues to take steps to attract foreign direct investment (FDI), enacting legislation that ensures equal rights for foreign investors, while also providing numerous incentives. As a result of this, FDI inflows have been rising steadily since 2002, with 2005-2006 showing rapid growth (Source: PricewaterhouseCoopers). According to the State Statistical Office of Macedonia, in 2006 the total value of foreign direct investments reached US$350.7 million, up from US$234.5 million in the previous year.

The strong economy has led to equally strong growth in property investment in Macedonia , with typical apartment prices rising from around €700 per square metre in 2003 to €1,113 per square metre in 2006, according to the International Union of Tenants / Global Property Guide. Overall, the Macedonian property market has shown an average annual growth of around 9%.

Alongside this steady capital growth lie impressive rental yields. Apartments in the capital Skopje return between 7% and 10.5% per annum, with houses generating slightly more, with rental yields of 8.4% to 11.25%.

Future membership of the EU, a forward-thinking government, government investment and generous tax conditions present an attractive climate for overseas property investment in Macedonia, and vastly increase the potential for good returns.