Neil - I agree all you say about getting into markets at the right time. The last ten years have been very good in most countries, mainly because of falling interest rates and increasingly easy credit. This trend is now going into reverse and my view is that the next ten years will be far more difficult. The trend will be one of stagnation in property prices. The question is, of course, whether there are markets that will significantly buck that trend. It seems to me it is not inevitable that Bulgaria, Romania, Poland, Croatia, Ukraine etc will necessarily see very good further growth. The best may be behind us. Nor will Germany automatically do well just because it is cheap. I too am chasing that ideal new market. My property portfolia is held entirely in Poland. However, I am beginning to wonder if the fundamentals may not in fact now be better in South America? (eg Uruguay, Argentina, Brazil) Could that be the place for the next 200% growth investment? Any thoughts? Stephen Barnes

NeilIt's useful to read the views of a dispassionate expert on the ground in Budapest. And I think you're dead right on Hungary.The government has clearly made good progress in turning the dire economic state around - and impressed the EU along the way. It's also impressed currency investors, as you noted.But, the situation was so desperate last year (as reflected in the currency in the first three quarters of the year), that any sign that the government was tackling the country's economic woes was bound to drive up confidence. I'd say that currency strength in an emerging economy like Hungary's can be a very fickle indicator of economic strength - or weakness.The fact remains that there is a long, long way to go, AND the efforts needed - which consist of very tough political decisions - to shrink that deficit - still the highest in Europe - become increasingly harder. The really big challenges for Hungary lie ahead - not behind. It still needs to tackle cuts and efficiencies in the politically hyper-sensitive areas of health, pensions and state bureaucracy.The economy hasn't turned the corner yet and, I agree with you, that this means we can't yet see the strong likelihood of the kind of fast economic growth and the consequent high cap growth in the property market that's needed to join the 200% club.The latest EU report on Hungary's progress provided some useful insight on the current state of play.In a generally upbeat report, which praised Hungary's efforts, the EU monetary affairs commissioner, Joaquin Almunia, added a cautionary message, saying that the country's finances were still 'fragile' and the 2009 deadline for coming into line with the EU's stability pact's 3% of GDP limit on fiscal deficit was subject to 'risks and uncertainties'. That's EU speak for 'the jury's still out.'Tellingly, Almunia added that the EU would continue to monitor Hungary closely, especially in the light of its 'past record' of being economical with the truth about the state of its finances. The government did after all lie for years to its people and the EU.The bottom line is - maybe Budapest will turn out to be a winner, but the prospects are far from clear yet. So, why should an investor take the risk when you look at the alternatives?CheersRobin

Guys Well, it seems the summer squeeze on credit is putting the reforms in Hungary at risk. See this very down beat review by the EIU http: / /www .economist .com /daily /news /displaystory .cfm?story _id=9675615 "Hungary, however, is in the midst of an austerity drive that has nearly brought the economy to a standstill. In a region where first-quarter GDP growth averaged around 7%, Hungary’s economy grew by just 2.7%. The flash estimate for the second quarter, at just 1.4% year on year, is even more alarming. In this context, the maintenance of relatively high interest rates at their current level is the last thing the economy needs. Still, this remains a serious risk." So, there is a substantial risk that Hungary's reforms won't bite before the markets do. This doesn't destroy the long term potential of beautiful Budapest. But it does mean it is a wait and see - ie. wait until there is a decent opportunity to buy and any blood spilling is over - and then come into the market on a value basis. Bad news for those already invested - but a potential candidate for investors in 1 to 2 years time? Cheers Neil

NeilIt's useful to read the views of a dispassionate expert on the ground in Budapest. And I think you're dead right on Hungary.The government has clearly made good progress in turning the dire economic state around - and impressed the EU along the way. It's also impressed currency investors, as you noted.But, the situation was so desperate last year (as reflected in the currency in the first three quarters of the year), that any sign that the government was tackling the country's economic woes was bound to drive up confidence. I'd say that currency strength in an emerging economy like Hungary's can be a very fickle indicator of economic strength - or weakness.The fact remains that there is a long, long way to go, AND the efforts needed - which consist of very tough political decisions - to shrink that deficit - still the highest in Europe - become increasingly harder. The really big challenges for Hungary lie ahead - not behind. It still needs to tackle cuts and efficiencies in the politically hyper-sensitive areas of health, pensions and state bureaucracy.The economy hasn't turned the corner yet and, I agree with you, that this means we can't yet see the strong likelihood of the kind of fast economic growth and the consequent high cap growth in the property market that's needed to join the 200% club.The latest EU report on Hungary's progress provided some useful insight on the current state of play.In a generally upbeat report, which praised Hungary's efforts, the EU monetary affairs commissioner, Joaquin Almunia, added a cautionary message, saying that the country's finances were still 'fragile' and the 2009 deadline for coming into line with the EU's stability pact's 3% of GDP limit on fiscal deficit was subject to 'risks and uncertainties'. That's EU speak for 'the jury's still out.'Tellingly, Almunia added that the EU would continue to monitor Hungary closely, especially in the light of its 'past record' of being economical with the truth about the state of its finances. The government did after all lie for years to its people and the EU.The bottom line is - maybe Budapest will turn out to be a winner, but the prospects are far from clear yet. So, why should an investor take the risk when you look at the alternatives?CheersRobin

Guys Well, it seems the summer squeeze on credit is putting the reforms in Hungary at risk. See this very down beat review by the EIU http: / /www .economist .com /daily /news /displaystory .cfm?story _id=9675615 "Hungary, however, is in the midst of an austerity drive that has nearly brought the economy to a standstill. In a region where first-quarter GDP growth averaged around 7%, Hungary’s economy grew by just 2.7%. The flash estimate for the second quarter, at just 1.4% year on year, is even more alarming. In this context, the maintenance of relatively high interest rates at their current level is the last thing the economy needs. Still, this remains a serious risk." So, there is a substantial risk that Hungary's reforms won't bite before the markets do. This doesn't destroy the long term potential of beautiful Budapest. But it does mean it is a wait and see - ie. wait until there is a decent opportunity to buy and any blood spilling is over - and then come into the market on a value basis. Bad news for those already invested - but a potential candidate for investors in 1 to 2 years time? Cheers Neil

NeilI was interested to read your thoughts on both Trieste and Verona as possible candidates for the 200% club.Not sure I'd agree, though - and even if I felt they may qualify, I don't think I'd put my money where my mouth was!The trouble with both locations is that they're in Italy! And, without putting too fine a point on it, Italy is in dire straits, possibly a great deal worse than many people realise. It's easy to miss the malaise - after all, the food's still the best in the world, the tourist spots idyllic (despite those pesky scorpions), and the culture and people are as magnetic and charming as always. The world's capital of fashion isn't in danger of going out of fashion anytime soon.But beneath the veneer there's a terrible battle taking place for the future of this economy between reformists and those who believe (as I read somewhere recently) that the state is a vast cow that can be milked endlessly.Without drastic reform, Italy's debt is going to sink its way of life in the not too distant future.While the creaking coalition government makes generally populist attempts to chip around the edges of ludicrous practices such as those that used to ban hairdressers from opening on a Monday, insisted that petrol stations were sighted certain distances apart to protect them from competition AND prevented supermarkets from selling non-prescription drugs, the real problem persists. The problem of Italy's gargantuan fiscal debt.There are no real signs as yet that there is an appetite for real competition in the market place, nor for reducing the massive pension burden by raising the retirement age to 60 (from 57, the lowest, I believe in the Western world), or for slashing red tape (and the number of bureaucrats) and the introduction of a truly modern tax system that drives and rewards Italians' undoubted entrepreneurship flair, instead of strangling it at birth.There is a chance - a slim chance - that the necessary reforms will take place in the next few years. And there is clearly at least a recognition in some parts of the political arena at least of what the problems are! But the jury is very definitely out at the moment and a long way from reaching even a majority decision on whether reform will come soon enough, if at all.Without big scale reform one of two things will happen, perhaps both:1) Italy will go to it's knees economically,2) It will be forced to abandon the euro (all these problems were dealt with in the past by devaluing the much missed lire).Until the signs are there that this structural reform is really underway, I personally wouldn't invest in Italian locations that are based on the country's economic well-being.BUT, if they do come, those structural reforms - slashed taxes, slashed spending and real competition - could unleash a truly vibrant and successful economy...after the initial pain, of course.Until then, I'd stick to those eternally appealing Italian tourist destination investments anyday.Unlike a sun location, a buy in, say, Tuscany, is not dependent on the fickle and price sensitive sun holiday market, commands a very high annualised yield and its capital growth will depend not so much on the Italian economy, but on that of the UK, the German , the Irish, the Dutch and America's, as well as others.I'd say the tussle over the fate of Alitalia will be a good indicator of whether Italy has the stomach for reform and is ready to face reality. On the day that the last potential bidder for the desperately ailing airline pulled out, citing unacceptable strings to the sale - one of which essentially insists that the over-staffing must continue - sections of the airline's personnel were on strike! Says it all really!Of course, as with much else in Italy, things are rarely as they seem. And it is widely believed that the government only allowed the stringent sale conditions to avoid conflict with the unions, and in the full knowledge that there would be no takers. Now it can turn to the unions with a greatly strengthened hand. A subtle tactic. Whether it will be too subtle and too slow remains to be seen.The same can be said for reform in Italy as a whole.BestRobin