PropertyThe Hilton Prague on the banks of the Vltava river dominates the skyline close to the city's famous Jewish quarter. The sheer scale of the modern development is breathtaking.

The hotel has 788 bedrooms, 19 executive suites, eight junior suites and a presidential suite. Its vast congress hall can accommodate 1,350 guests and hotel guests can enjoy five-star luxury that includes a 400 sq m gym, a swimming pool and jacuzzi.

Strolling around the Czech Republic's biggest hotel leaves the visitor in no doubt that Prague is one of Europe's wealthiest cities. The hotel was recently bought by Irish entrepreneur Mr Seán Quinn in a €145 million deal.

The high-profile deal is just the latest in a swathe of Irish property investments across central Europe, stretching from Warsaw to Bratislava, according to Mr Ed Hughes, an Irish-born partner in one of the Czech Republic's biggest real-estate agents, Lexxus.

Mr Hughes, who moved to Prague in 1991, shortly after Czechoslovakia (now the Czech Republic and Slovakia) made the transition from communism, says Mr Quinn's investment in Prague, and the purchase of Prague's Four Seasons hotel by former Irish tax inspector Mr Derek Quinlan, is generating renewed interest in the region for Irish investors.

"There is no doubt that EU accession is a key factor in this," says Mr Hughes. "Entry to the EU offers investors a guarantee that their property cannot be played around with by domestic politicians. Central Europe is also benefiting from greater travel and new air routes are opening up the market for a whole new type of investor."

Lexxus, which helps foreigners locate suitable investments and tenants to rent their properties, is arranging 200 to 250 deals a year in the Czech Republic for Irish investors. Most of the investments are being made by individuals or small syndicates, who are buying apartments in Prague by remortgaging their Irish homes.

The classic profile of an investor is someone between the ages of 35 and 55 who has made a bit of money and who does not want to put more money into the Irish market, says Mr Hughes.

Property investors are being attracted to central Europe by yields of between four and 10 per cent and capital growth rates of 15 to 20 per cent, the latter driven by expectations of a property boom following EU accession.

Legal changes in central Europe following accession could make it easier for foreigners to buy property in certain countries. However, the Czech Republic will retain a key bureaucratic restriction that forces EU citizens to establish a registered company before buying property, according to research by the Prague-based property firm Hanex Group.

Mr Frank Hanecak, a director of Hanex, writes in The Prague Post, an English-language weekly, that current legislation would enable these restrictions to remain for up to five years for EU nationals who do not live in the Czech Republic.

The restrictions, which vary considerably throughout the 10 accession states, do not for the most part affect big investors. They are also easily bypassed by small investors.

Easier access to finance is another key factor driving property investment in central Europe. Many foreigners raise cash at home to buy property but, increasingly, banks in the accession states are offering alternatives to investors. Banks in the Czech Republic are offering mortgage rates of under 3 per cent, while Irish investors in Poland can tap into finance offered by AIB's Polish bank, BZ WBK.

"We have received a considerable amount of interest from individuals that want to buy residential property in Poland, particularly Warsaw. It is running at about 10 inquiries a week," says Mr Maurice Tracey, senior divisional manager of AIB Poland.

"To accommodate investors' needs, we have established an international desk, placed English speaking staff in key branch locations and developed special buy-to-let mortgage packages to help them."

AIB has sought to tap into the huge interest by launching the Polonia Property Fund. The fund, now closed, was aimed at high-net-worth individuals and targets property throughout central Europe.

Mr Tracey says the interest is being generated by the higher yields available in Poland compared to the Dublin market. But he cautions that the yields reflect higher risk. "This is an economy in transition, so it is not as stable as the Irish economy," he says.

KeyInvest, a Polish-based property investment company founded by Irishman Mr Padraic Coll, will have invested €200 million in Poland by mid-2004, much of which has been invested by high-net-worth individuals and syndicates from the Republic.

"People who previously invested in Britain are now looking for good yields in Poland, where there are a lot of good-quality offices available," he says. "Good-quality apartments in Poland also cost a quarter of the price of a Dublin apartment."

This week, KeyInvest helped arrange a €60 million retail and office development in Warsaw for Capital Partners, which is headed by the Dublin-based entrepreneur Mr David Sharkey. The Okecie Centre on the outskirts of Warsaw comprises 52,000 sq m of retail space and 20,000 sq m of office space.

Property analysts believe EU accession could spur further foreign investment to the accession states over the next few years.

Irish entrepreneurs will be among the pioneers in the region.

A consortium of investors put together by Mr Derek Quinlan, which recently purchased the Savoy Hotel group is reportedly seeking investments worth €700 million in the region.

Mr Seán Mulryan's Ballymore Properties has targeted Slovakia for investment. The company is working on a €165 million riverside development in Bratislava, the Slovakian capital, and has spent up to €60 million buying properties in Slovakia and the Czech Republic in recent years.

With growing fears over the state of the Irish property market, the tide of Irish money flowing into central European property is likely to continue.