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TV property expert predicts UK property market recovery | Banks under pressure to cut rates | Olympian plumps for Brazil | Annual property show will put spotlight on Russian market

Emerging Markets – The Other Side of the Coin

The one question on every investor's lips is, "where next?" Constantly on the look out for what has now become a familiar phrase - the next emerging market, most experts agree that with the financial crisis in full swing in the west, emerging economies around the world are coming into their own. Cushioned from the economic downturn and the credit crunch currently being experienced in western economies, these emerging markets are quietly shifting the balance of power in the world economy, while the traditional powerhouses are still busy licking their economic wounds.

The group of countries dubbed the BRIC economies (Brazil, Russia, India and China) by the Goldman Sachs investment bank in 2001 have become the most prominent emerging giants of all. The Goldman Sachs theory stated that by 2050 the BRIC countries will eclipse most of the current richest countries of the world. The Royal Institute of Chartered Surveyors (RICS) supports this theory, commenting that the four countries now account for "more than 50% of the world's GDP, and have started to devour ever increasing proportions of global property transaction activity."

In Latin America, the B of the BRIC economies - Brazil - is currently leader of the pack in terms of property investment and the country is currently experiencing a residential building bonanza, thanks to its sound fiscal policy and low interest rates. Uruguay is also showing signs of following in Brazil's footsteps, with GDP growth for Q1 2008 reaching a massive 10.9% and the country set for an annual increase of 6.8%, slightly higher than 2007.

For those investors who do not wish to go as far as South America, Eastern Europe is closer to home and holds just as much promise. Countries such as Romania and Slovakia both recorded massive GDP growth in the first quarter of 2008 and are attracting increasing amounts of foreign direct investment. Romania has seen a staggering 60% annual surge in foreign investment into the country during the first months of 2008 and the government has passed new laws to ensure that foreign investors receive the same incentives as Romanians. The government is also keen to ensure that investment is balanced across the country, encouraging development in emerging regions. One of those areas is the city of Cluj-Napoca in north west Romania where some high profile investors, such as Nokia and US company, Emerson Electric, are already established.

The other star of Eastern Europe is Slovakia, which recorded GDP growth of 8.7% in the first quarter of 2008, making it the fastest growing economy within the EU and OECD. In July, Slovakia was officially approved as the second former communist country for transition to the euro currency on 1st January 2009. Slovakia is ticking all the right boxes for investors with house price growth of 21.3% year-on-year since 2002, low tax on rental income, a flat rate of income tax and high rental yields in Bratislava, the capital. It is certainly one to watch.

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