When you look at the Eastern Eight, it's obvious that Ireland is a great yardstick for spotting the best place to invest.

Simply put, many of the reasons for Ireland's spectacular growth are present, or potentially present, in the EU accession countries of Eastern Europe.

Right now, you would be a brave investor to buy into Ireland's real estate market. Most experts agree that it must be near the peak of its cycle, if not near a sharp correction.

But had you bought into the market some ten or twelve years ago, you would have seen gains as good as anything in the world, with rises running well into double digit growth year after year.

No single factor accounted for this boom, but rather a combination.

It's worth spending a few moments identifying what those factors were because they are definitely worth applying to Eastern Europe.

Of course, we can breakdown the growth in property prices into two parts - demand and supply.

On the demand side, price inflation was fuelled by:

• A huge increase in employment during the 90s of some 30%, brought about by a massive influx of investment.
• Unemployment fell from 16% to less than 5% in the last decade.
• Major reforms of personal taxation that have helped create an annualised 7% increase in disposable income
• Big reductions in business taxation
• Big cuts in government spending - not just in real terms, but more importantly as a percentage of Ireland's GDP
• A dramatic drop in interest rates as a result of Ireland's entry into ERM and later the Euro, meaning that monetary policy (i.e. interest rates) was effectively decided in Frankfurt rather than Dublin. The effect of this has meant that money became cheap to borrow. Real mortgage rates have been on a downward trend since 1992 when they stood at 12%
• A big increase in migration into Ireland, said to have created up to 25% of housing demand during the 90s
• A bulge in the population of 25 to 44 year olds - the portion of the population most active in the housing market
• And, on the supply side, Ireland began its boom with a low stock of housing quite unable to meet the new and sudden demands. New builds increased dramatically - between 1993 and 1999 there was a 16% rate of yearly increase in new housing stock.

Inward Investment

While we can see that a number of reasons led to Ireland's house price boom, the key factor is inward investment, which created more jobs and disposable wealth in the country.

So, for the real estate investor with an eye on Eastern Europe, the question is why did that money head for Ireland?

Perhaps even more interesting is where predominantly it came from.

First, from the EU and, when this began to taper off, from private business, led by a wide margin by the United States.

What led to this private investment and do the same conditions apply to the Eastern Eight?

We've already looked at what attracts big business to invest in a country. Let's look a little more closely at why Ireland seemed to have it all.

Certainly, its boom began at the start of an investment and growth cycle - since 1993 economic recovery in Europe and, most importantly, in the US was solid.

As the era of new technology and the Internet boom took hold, investment grew exponentially. Ireland reaped the benefits of this.

To a large extent, how much investment flows into Eastern Europe will depend on how well the global economy performs, especially how well recovery in the United States takes hold.

Ireland was a relatively cheap source of labour, labour that was also well-educated and spoke English.

It also offered attractive and simplified tax incentives to big business as well as the low interest rates dictated by the European Central Bank.

The government's decision to set corporate tax at an ultra-low 12.5% (even lower than Hong Kong!) was possibly the single biggest factor in luring private cash to Ireland.

More than 1,000 overseas investors are estimated to have set up headquarters in Ireland as a result.

In addition, the government streamlined finances and exercised a cautionary fiscal policy - both of which are attractive to corporate investors looking for long-term investment potential.

Do the EU accession countries of Eastern Europe offer the same attractions as Ireland did around a decade ago? The evidence shows that yes, some do.

Already many of the Eastern Eight have learned from the Irish experience. Take a look at the attractive tax regimes already in place in some of the countries.

Estonia's rate of corporate tax is a relatively low 26%. All corporate profits that are reinvested are exempt from any tax.

Lithuania's corporate tax rate is 24%.

Latvia's rate is even lower at just 19%.

The Euro will of course be a huge boost to the countries' economies as they adopt it. But even before this happens, house price inflation, fuelled by massive injections of EU money and foreign investment will lead to more jobs, increased wealth creation and consumer demand, and will offer fabulous returns.

In fact, remarkable returns on property investment are already happening in this part of the world.