Eastern European Property

Overseas Property Mall Buyers Guide Series to RomaniaWhere to Look

Bucharest is, by some way, the most favoured target for overseas investment but Romania has great tourist potential so resorts and mountain locations may be worth investigating. Brasov in the inside of the elbow of the Carpathian Mountain range is another popular location owing to its wealth of historic buildings dating from the time of its long occupation by Romania’s German-speaking minority. Poiana Brasov is considered the country’s best ski resort. Prices in the main provincial cities such as Cluj will be in the region of 8-900 Euros a square metre but in central Bucharest this can rise as high as 3,000 Euros a square metre.

Snags, Points to Remember, Legal and Otherwise

There are a number of problems relating to investing in property in Romania but the picture is not completely bleak. For instance there is a longstanding prohibition against foreign ownership of land (but not buildings) but it is possible for wholly foreign-owned companies to have title to land. Also this particular constraint will not be popular with fellow-members of the European Union who are likely to insist that Romania creates a level playing field for investors.

Colliers International office in Belgrade has reported sharp increases in the cost of properties in the Montenegrin coastal districts. In the list of resorts with prices in the 2500 to 5000 Euro range are Bar, Hercog Novi, Tivat and Ulcinj, while the report implies that prices in Budva, Petrovac and Sveti Stefan are higher still.

A key consideration has to be the stability of this part of South Eastern Europe. Montenegro shares frontiers with Albania, Kosovo and Bosnia Hercegovina and this latest phase of the country’s independent existence dates back only 12 months. To put this in some sort of context; how many of the investors in properties in Tallinn or Riga would have been prepared to commit themselves as far back as 1992? Montenegro’s economy suffered from being tied to Serbia’s in the 1990s – an important factor in the move to independence – and the country has a low GDP (at $2.27bn considerably less than the last year’s profits for Tesco) and high levels of poverty. For foreign investors the factors in its favour are natural beauty, closeness to Western Europe and the use of the Euro.

The International Herald Tribune (IHT) reports that the residential property market in Prague has matured and no longer the attraction of gold field for property investors. The article says that annual returns at 5% are still a little higher than for Western European markets and that the Czech Republic presents some sound investment propositions, especially at the higher end of the property range. This contrasts with the rosier picture painted by Property Secrets in mid-January which forecast growth rates of 20% for Prague and 15% for Brno ( the country’s second city) in 2007.

The RICs report (pdf)on European residential property confirms that the high end of the market is the most promising – note that the Czech republic has had the lowest level of house price inflation among smaller European countries in 2005/6). Mortgage rates are currently at around 3.8% for a one year fixed rate mortgage or 4.45% for a five year fixed rate mortgage.

The country’s interest rates trend is very uncertain with the possibility of further rises to stave off inflation and a further slide against the Euro (read Bloomberg article here). Mortgages are available in Euros or Crowns (Czech Koruna) but, given the exchange rate situation, a local currency mortgage may be a safer commitment. The longstanding legal requirement for foreigners to purchase property by means of a Czech registered company is now being repealed to meet EU requirements.

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A year ago AT Kearney placed Poland fifth on its index of Foreign Direct Investment Confidence. Given that China and the USA occupied first and third positions on the index respectively, this may not seem such a strong endorsement of Poland’s attractions a year later but, in fact, the Polish economy is still doing very nicely and the property markets continues to prosper alongside.

 

According to the Royal Institute of Chartered Surveyors 2007 European Housing Review, Poland’s housing market has continued to grow following the downturn in 2001 and 2002. Warsaw house prices rose 33% in 2006, up from 28% the previous year. Krakow saw a rise of 55% in prices being agreed for new-build apartments in 2006, giving the city the fastest growth of any location in Europe.

 

Prominent characteristics of the market include the high number of people per dwelling (3.2, the highest average in the EU), the high proportion or apartment blocks – 40% of Poles live in high rise blocks and the poor condition of much of the country’s housing stock. Nevertheless all the country’s major cities have substantial districts given over to detached housing. Although home ownership reached 57% by 2004 it is only increasing slowly.

Many UK homeowners will be delighted with the near-9% house price growth notched up over the past year, but their counterparts in the Latvian capital of Riga really have something to smile about: prices are up 39% from 12 months ago.

Riga topped a new global house price league table published by the estate agency Knight Frank. Its turbo-charged performance put it well ahead of Bulgaria and Denmark, second and third on the list with annual price growth of 19% and 17.8% respectively. By contrast, the biggest loser was Hong Kong; a year ago Hong Kong was boasting annual price growth of 20%, but prices fell by 2.6% over the 12 months to September 30.

Only Germany managed a worse performance – prices there dropped by 3%. Liam Bailey, Knight Frank’s head of residential research, said: “Germany has been the poor man of Europe in housing terms for well over a decade, and any change in this position is still some way off.” Mr Bailey analysed the property markets in 32 countries. Japan, Portugal and Hungary also saw prices fall.

Explaining Riga’s strong showing, Mr Bailey said: “Latvia has seen, and is forecast to see over the medium term, economic growth above the EU average. Wage inflation, growing prosperity and access to less constrained mortgage finance have all contributed to rapidly rising prices.”

It is a similar picture in Bulgaria, where the market has benefited from an influx of Britons buying second homes.

All eyes have been on the US housing market lately, and the new data provides the latest evidence of a sharp slowdown, showing that the annual rate of growth has more than halved to 5.7%.

Knight Frank also found that the appetite for second homes continues unabated, helped by the relentless march of the low-cost airlines. “Looking ahead, we are upbeat about prospects in 2007,” said Mr Bailey.

Source: Guardian

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Britons are travelling farther to work, on job assignments to Moscow or Budapest. Lucia Adams looks at their housing needs
EASTERN Europeans are here in a big way, we all know, but what is less apparent is that they are part of a two-way traffic: Britons are heading east for holidays and to find holiday homes and also to work. We hop on a cheap flight to Tallinn, Warsaw or Budapest and scour the emerging property markets, buying homes just about anywhere we can place on a map. But is there money to be made? Are holiday lets in Poland ever going to be all the rage? Or might letting to expats on overseas assignments in Russia be a good bet?

Britons are becoming more itinerant and there is growing demand for rentals in areas where blue-chip companies have set up shop. For buy-to-let investors who want to invest in Central and Eastern Europe, but who do not want to get involved in holiday lets, focusing on the corporate market can be a good proposition. According to a PriceWaterhouseCoopers study of trends in 2004-05, 42 per cent of 203 companies surveyed forecast growth in short-term assignments in Central and Eastern Europe. In a separate report by Pricoa Relocation in 2005, more than 40 per cent of companies questioned expected to send their staff on short-term assignments to the Czech Republic, Hungary, Poland, and Russia (see the above chart). For those on assignment, finding good-quality rentals in cities often still full of soulless, Soviet-style workers’ housing blocks can be a challenge.

Darren Dyer, who moved to Moscow as a merchandising manager with the Kingfisher DIY retail chain Castorama, says: “There are a lot of big companies coming to Moscow who want to look after the welfare of their people. But there just aren’t the places available; there is more demand than supply of properties that Westerners would be prepared to live in.”

Having relocated with his wife, Michelle, and son Cameron, 8, the family were keen to live in a gated expat community near the Anglo-American school. They were told that there was a year-long waiting list, and the minimum $7,000 (£3,750) monthly rent was higher than Darren’s accommodation allowance.

They settled instead for a three-bedroom apartment in a secure block that they rented for $5,000 a month. It was a far cry from the rural Dorset home that they left behind. Darren says: “We had never lived in an apartment for the first six months there were no children for Cameron to play with.  Noisy building work in the block and a rent increase to $6,500 after a year prompted the family to start hunting again. This time they found a three-bedroom townhouse in the much-desired location of Pokrovsky Hills. But it wasn’t cheap. Darren says: “Rent is $8,500 month. We had to put up a $10,000 deposit and pay six months in advance.”

Liam Bailey, of Knight Frank, says that Moscow’s popularity among big European and American companies has created competition for topnotch homes, although many investors are frightened of buying there.

Other hot spots in Central and Eastern Europe include Slovakia, Bulgaria and Romania, which are on course to join the European Union next year, and the Baltic states, according to Savills. Agents in those countries say that house prices are rising by 30 per cent or more a year. In larger and more developed residential markets such as the Czech Republic, Poland and Hungary, price rises, though substantial, have been more moderate. But the demand for top-quality homes can be just as keen.

Campbell and Kirsteen Macfarlane moved from Scotland to Budapest in January for a two-year assignment with BT Global Services Kirsteen as a bid manager, and Campbell as a sales director for Eastern Europe and Russia. Although they enlisted the help of the relocation company Inter Relocation (00361 2785680, www.interrelo.com) they had to view 35 properties before finding the right home.

They now rent a three-bedroom detached house with a swimming pool in District 2, a 20-minute drive from their office, for €2,400 (£1,630) a month (negotiated down from €3,200). Kirsteen says: “There is a massive variety in quality. Expats tend to live in certain districts people tend to clump together either near the centre or near English-speaking schools. Americans and the French have reinvigorated this area and made it more popular.”

For the intrepid investor hoping to let to corporate employees, Charles Weston-Baker, of Savills, points to the expanding business communities in Sofia, Prague and Cracow. He says, however, that returns vary considerably, and that the quality of property must be exemplary in specification and location. “Gross yields are 5 to 10 per cent and occasionally more. With capital appreciation, we always say: be realistic. Say 5 per cent but often it can be 10 or 15 per cent. Prices can go up as well as down in value.”

Source: Timesonline

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WARSAW, Poland Klaudia Kocimska’s dream is slipping away: She would love to own a small but modern apartment in downtown Warsaw, in walking distance to her office, with a little terrace for savoring long Sunday brunches.

Like many Poles hoping to buy a home, the 30-year-old journalist has resigned herself to painful compromises having to live in a suburb and commute by car as soaring housing prices driven partly by foreigners put much of the city’s best property off limits to normal working people.

House and apartment prices in Warsaw and other leading Polish cities have spiraled upward since the eve of the nation’s 2004 entry into the European Union a boom driven by low interest-rate mortgages, housing shortages and foreign speculators snapping up real estate as investments.

“The market is very hot,” said Bogumil Rutkowski, a manager at the Knight Frank real estate agency in Warsaw. “We’ve had a boom since the second half of 2003, but it’s just been accelerating more and more lately.”

In 2005 alone, real estate prices in Warsaw rose 30 percent in prime locations, and between 10 and 20 percent in other areas amid the strong demand, according to Knight Frank. Now, for example, a one-bedroom apartment in central Warsaw of 65 square meters (700 square feet) runs between 280,000 zlotys and 1 million zlotys (about US$90,000 to US$325,000; €70,000 to €250,000).

“The demand is generally driven by local people but there are buyers from Spain, the U.K. and Ireland buying new constructions in bulk 10, 20 or 30 apartments and sometimes even more,” Rutkowski said. “They compare Poland to Ireland and Spain of 20 and 25 years ago, and they believe the price appreciation in residential property there will happen in the same way in Poland.”

But as housing prices in this former communist country rise, wages for most Poles remain low compared to western European levels making much of the housing stock unaffordable for them. Last year, gross domestic product in Poland was at €11,700 (US$15,000) per capita, significantly lower than Ireland’s €32,100 (US$41,000) or Britain’s €27,000 (US$35,000), according to Polish government figures.

“The foreign speculators are pushing the bar up for normal buyers,” said Andrzej Halesiak, an economic researcher with the BPH Bank who has studied the issue.

Some of the difficulty is offset by easily available low-interest loans, but most house and apartment hunters these days still grumble.

They say that not only are prices rising dramatically but that any good deal that appears on the market gets snapped up immediately.

“I am really fed up,” said Kocimska, a journalist for Polish state television, describing her months of fruitless searching. “I started looking too late I really should have started last year.”

Kocimska had her sights set on a project still under construction between Warsaw University and the left bank of the Vistula River, a small ground-floor apartment with a patio jutting into a patch of green. Unlike most of the older buildings in central Warsaw, it will have a parking garage an important factor for Kocimska.

The price was 400,000 zlotys (US$130,000; €100,000) for about 50 square meters (540 square feet) the most her bank was willing to lend her but in the two days it took her to decide, someone else was faster. “That apartment was my dream,” she said.

Now, there are very few other newly constructed buildings available in central Warsaw, and Kocimska says she’s thinking about buying in the suburbs or an older building in town even though it won’t have a garage or give her the chance to design the interior from scratch.

“I’ve become really flexible,” she said.

The new prime minister, Jaroslaw Kaczynski, promised in his first policy speech in July that he would make new construction a priority. But observers say too little land has been cleared for building to ease the crunch in the near future.

All the talk of prices and shortages masks an even deeper cultural shift as Poles learn to view property as an investment and take out mortgages to buy it, experts say.

Darek Karbowniczak, an agent with the Ober-Haus real estate agency, said it marks a sharp change from communist times, when saving U.S. dollars in cash was one way people held on to their wealth. Even in the early years after the 1989 collapse of communism, mortgages were hard to come by and buyers usually paid for property in cash.

But with Poland now in the EU, banks have begun granting mortgages easily as membership has prompted greater competition in the banking market, Karbowniczak said. And as the dollar has weakened in past years, Poles no longer view it as a guarantee of financial security.

“The most striking thing in all of this is that Polish people learned very quickly to think in a capitalist way,” he said.

Though the housing boom is playing out throughout many cities in Poland and elsewhere in other Eastern Europe countries that joined the EU in 2004 from the Czech capital of Prague to Riga in Latvia the drama seems especially poignant for Warsaw, given the ravages inflicted on it during the 20th century.

The once-picturesque capital was almost completely destroyed during World War II, and in the following decades the country’s communist authorities filled it with drab, uniform housing blocks.

Today, that style still defines much of the landscape, making the random areas of older villas and parks all the more desirable. The supply of new and well-renovated housing isn’t keeping up with demand in the capital, home to 1.7 million people and growing.

For now, new housing is a precious commodity one that Peter Turner, 65, a semi-retired property developer from Falmouth, Britain, hopes to cash in on.

Turner recently viewed Warsaw’s new “Vistula Garden” building complex across from a tree-lined stream, trying to decide whether to buy several units in the project still under construction.

He had never been to Poland before, but said he was convinced that buying property now would be a good investment.

“Poland has a highly educated population, similar to Ireland. The Irish went abroad with their education and skills and came back with money,” Turner said. “I see no reason why it shouldn’t follow the same pattern here.”

He said he briefly considered buying property in Bulgaria and Romania, but decided it would be too risky.

“Bulgaria and Romania aren’t part of the EU, and it’s not yet clear if they’ll be let in next year,” he said. “There’s a big question mark there. But I feel comfortable in Poland.”

Source: IHT

Crammed onto a narrow crescent of land beneath the sheer cliffs of Boka Kotorska, Europe’s southernmost fjord, Montenegro’s ornate city of Kotor hides behind a fortress wall six centuries old.

But, even as Montenegrins celebrate their recent vote to become the world’s newest independent nation, a foreign force is streaming across the border from Dubrovnik, Croatia, making a beeline for the fjord and marching in past the winged lion of Saint Mark, a sculpture in stone that stands by Kotor’s gate.

Following a flurry of rapturous reports in the media, property shoppers from Britain and Ireland are arriving in droves to scour the Boka Kotorska area for affordable coastal villas.

“Driving around the Boka bay after flying into Dubrovnik fairly takes the breath away, and many come with the hype given by media hell bent on selling Montenegro as a destination where property on the sea can be bought cheap,” said Robin Gellately-Smith, a property manager and architectural expert for Total Group, a Kotor-based real estate agency.

But if there ever was such a thing as a discount villa in Montenegro, there are none anymore.

Decrepit stone ruins on hillsides overlooking the Boka Kotorska still can be bought for as little as €20,000, or $25,760, but modernization is expensive and difficult.

And, while the country’s nascent property market is not yet indexed, most local real estate agents say prices have risen 50 to 60 percent or more in the past two years.

Prospective buyers are better off shedding unrealistic price expectations and searching instead for genuine quality around the fjord, Gellately-Smith said.

Montenegro’s planners have earmarked the land bordering the butterfly-shaped body of water for minimal development. In contrast, other sought-after destinations along the Adriatic, like Sveti Stefan and Budva, show the scars of illegal building that took place over the past 15 years. “Here on the Boka bay, I think, is where the high-value holiday homeowner will find refuge,” Gellately-Smith said.

Two properties now for sale in the fjord area are representative of the best in the local market.

One, a three-bedroom apartment inside Kotor’s city wall, was sold last year to a British buyer, David Rogers, a semi-retired luxury tour operator. He refurbished the 140-square- meter, or 1,507-square-foot, apartment to a luxury standard unusual for Montenegro and then put it back on the market at €360,000.

“That’s a fairly senior price, but of course the apartment is big and we have done it up – renovating, repainting, rewiring, everything. We haven’t seen anything else like it in Kotor. It’s got high ceilings and a lot of light,” Rogers said.

The second property, two renovated 18th century villas being sold as a single hillside complex, is priced at €1.9 million.

With a total of four bedrooms and 2,000 square meters of terraced gardens, the twin villas in Perast, near Kotor, occupy one of the fjord’s most coveted positions, with a clear view of two picturesque islands a short distance offshore.

“The Perast property is in perfect condition. It is by far the best thing on the market at the moment,” said Andrea Marston, general manager at Dream Property Croatia & Montenegro, a British real estate agency that entered the Croatian market four years ago and Montenegro two years later.

Echoing Gellately-Smith, Marston said the best properties in Montenegro would not sell cheaply, especially because traditional stone buildings in good condition – the kind most buyers want – are in short supply. “All the old stone properties are being snapped up rapidly,” she said.

Yet Marston said she expected prices to continue to rise in all segments of the Montenegrin housing market for the next several years, basing her analysis on the experience of neighboring Croatia, which is a similar market in many respects.

“Montenegro is not anywhere near the top of the curve yet. It is still behind Croatia, and prices in Croatia are still increasing, a little bit slower than they once did but not much slower,” she said. “Montenegro will catch up with most of Croatia, probably in five years, but it will not catch up with Dubrovnik in the same time.”

(The average price per square meter for properties on the Croatian coast is €1,500, although prices have gone as high as €5,000 to €6,000 in Dubrovnik.)

Conscious both of fast-rising prices and the extraordinary natural scenery that Montenegro offers, many buyers are choosing to develop one property with the goal of turning a quick profit and buying another for personal use, local agents say.

David Sergeant, a publisher from London, is one such recent buyer. “Simply stunned” by the natural beauty around the fjord, he said, he decided to purchase, as an investment, an apartment in Kotor for €290,000 and, for personal use, a villa in the nearby village of Muo for €358,000.

“The fast-improving economic and political situation makes Montenegro very attractive, not only as a destination to live in, but also it is a terrific investment opportunity,” Sergeant said.

What some potential buyers may not know is that this country of 630,000 people is far poorer than most of the rest of Europe and, Gellately-Smith said, weaknesses in its infrastructure continue to pose problems.

For example, water shortages, sometimes acute in July and August, may interfere with the plans of many buyers, like Sergeant, to install swimming pools. “There is plenty of water in Montenegro. It is a matter of getting it where it is needed,” Gellately-Smith said.

The hope, held both by locals and by foreign investors, is that independence from Serbia, leaving that country’s political isolation behind, will increase Montenegro’s access to foreign funds.

Already the U.S. Agency for International Development and European Agency for Reconstruction are major contributors of infrastructure-related aid.

A final wild card is the Montenegrins themselves, Gellately-Smith said.

“They will not easily give up their land and birthright to foreigners lightly. They have fought against all comers over the centuries to keep their land from foreign occupation, including 500 years of Ottoman aggression,” he said.

“Investors with money buying small houses in out-of-the-way stone villages are bound to experience neighbor frustration as people see friends and family move away to be replaced by wealthy foreigners, modernizing and building swimming pools, only to use the building a few months of the year.”

Source: IHT

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Megan Malone doesn’t need to be told that flats in Latvia are rising in value faster than anywhere else in the world – because she owns one. The freelance educationalist, who lives near Brecon in mid-Wales, bought her 1920s two-bedroom apartment in the Latvian capital of Riga for just £35,000 in 2003. Now it has more than doubled in value.

“Actually, I missed the boat. Two years earlier and that amount would have bought a five-bedroom mansion,” says Megan, whose flat in a managed block in the old part of Riga was extensively improved by the former owner. “But when I knew Latvia was going to join the EU, it seemed the right time to buy.”

Few could doubt Megan’s shrewd purchasing skills at choosing a location that, at the time she bought, had scarcely been heard of by most in the UK. But she is not alone, as Britons increasingly become a nation of risk-taking property hunters.

Today, literally millions of us own foreign homes while hundreds of thousands buy in highly unusual locations, driven by the desire to own a place in the sun and grab the maximum capital uplift when – with luck – it becomes a global hotspot.

“Jet-to-let is the new buy-to-let,” says Liam Bailey, research guru at estate agent Knight Frank. “People want a holiday home but they regard it as an investment too. Find yourself a place overseas before it has a step change and hugely appreciates, and you’ve got a bargain.”

Bailey is the author of Knight Frank’s new Global House Price Index, which is due to be published tomorrow. The Sunday Telegraph has had an exclusive preview of the figures, and the good news for Megan Malone is that Bailey’s research – which looks at parts of countries where Britons are likely to buy property – has Latvia at the top of a 30-nation league table for capital appreciation.

“Apartments in Riga have risen more than 45 per cent in a year,” Bailey notes. “It’s a levelling up that’s affecting all markets in the former Eastern Bloc. Wage inflation, growing prosperity and easier access to mortgages have all contributed to rapidly rising prices.”

Arc Properties, a Putney-based estate agency specialising in Riga and other east European locations, says British interest has mushroomed in the past 12 months. “Most people want to buy off-plan because prices are cheap and they get a lot for their money,” Rebecca van Lierde-Molinoff of Arc observes. “A few want period properties. They’re all banking on rental income.”

Although much of Latvia is forest-covered, the main tourist attraction is the pretty walled Old Town in the capital, Riga. It might seem the obvious place to buy, but Megan Malone recommends buying nearby. “Old Town flats are very small,” she says, “so don’t be fooled by the beauty of the area. You get a lot more for your money in surrounding areas.”

Intriguingly, 75 per cent of Arc’s buyers don’t even visit Latvia. They just buy there as an investment. The properties are used either as holiday homes, which are rented to tourists, or for long-term lets to locals.

Other east European high fliers in Knight Frank’s league table include Bulgaria and Estonia, up 20·5 per cent and 12·9 per cent in the past year, while far-flung places like South Africa, Canada and New Zealand also do well with increases of 14·3 per cent, 11·8 per cent and 10·6 per cent respectively.

Bailey himself tips Germany as the likely best performer next year from his current league table of 30. “Germany is Europe’s largest economy and the world’s largest exporter but its property market is still under-performing. We expect sustained growth from 2007.” Meanwhile he is working on including more east European countries in his analysis. “Accurate data is difficult in this region,” he says, “but we should shortly be getting robust figures for some new countries.”

These include Slovenia and Slovakia (“Probably the two countries with the best potential for large-scale growth in eastern Europe”) plus Russia – or, at least, Moscow. “It has huge potential for growth and will rival London as the world’s most expensive city in five years,” Bailey claims. “But few can afford even today’s prices, which are already extremely high.”

All of this is music to the ears of Britons traversing the globe in search of bargains. There are no official figures held on foreign property ownership but there are some fascinating indicators. In Spain alone, Britons own 69,284 second homes, according to the Office of National Statistics (although as that figure includes only those declared to the Inland Revenue, there may be many more).

The Department of Pensions says 871,000 Britons are retired and draw a state pension while living permanently overseas – and there are as many people again who have retired abroad who are either below pensionable age or choose not to take a pension at all.

“No one knows the definitive figure but it’s big and getting bigger,” claims James Hickman of Caxton FX, a currency firm specialising in overseas home purchases. “Homes in old favourites like Spain are expensive now and, because there are so many of them, they’re difficult to sell. Cannier buyers wanting good returns are looking for places that are undervalued and may soar in the near future.”

And Hickman’s top tip? It’s another vote for Germany. “It hasn’t risen much in value for over a decade and that must change soon,” he says. “I’ve had one British client who’s snapped up a terrace of 16 flats on the edge of Berlin for a total of €370,000 (£250,000), with each property pre-let and giving an annual yield of 14 per cent. Now that’s a good buy.”

But Germany’s problem may well be that it’s just too close, too easy to get to, for us increasingly-adventurous property colonialists. Distance and time are not necessarily obstacles when it comes to a Briton bagging a bargain in the sun, it seems.

“There are Caribbean and South American countries that are good investments, especially for holiday homes,” Liam Bailey says. “The markets are not always as transparent as in Europe and North America, but prospects in areas with high levels of tourism are generally good.”

A 12-hour flight from London to the Venezuelan tourist haven of Isla Margarita hasn’t deterred Carmel Daly-Fletcher, who runs The Skyrack pub next to Headingley cricket ground in Leeds. She and her husband, Paul, have remortgaged their home to buy three villas on Margarita, the cheapest of which is £61,000.

“You can’t get a two-up, two-down for that in this country, or in Ireland or Spain,” she explains. “There’s no value left to realise in those property markets so you have to look far away at emerging nations.”

Carmel isn’t put off by the threat, however distant, of the properties being confiscated by nationalisation-mad Venezuelan president Hugo Chavez. Instead, Carmel sees the long-term likelihood of a financial killing. “There are direct flights now from Gatwick and Manchester, and Margarita’s a popular holiday destination for Norwegians, Germans, the Danish and wealthy Venezuelans,” she enthuses. “We’re getting a six per cent guaranteed rental income and a month’s holiday there each year too – we’ve got a winner.”

So if a tiny island off South America is an attractive investment for Britons (and be honest, could you find Isla Margarita on a map?), is anywhere out of bounds? This summer has seen the first holiday homes on Mauritius and buy-to-lets in Las Vegas go to Britons; this autumn there will be new schemes launched at Buenos Aires in Argentina and Gdansk in Poland, again with sales drives in this country.

You have to go literally to the ends of the earth before you find a continent that remains a flight too far for the Brits: Australasia. Two New Zealand developments for sale over here – one at Wanaka and the other at Tui Creek, both on South Island – have so far struggled to find British buyers for properties priced at £400,000 and over. And two UK exhibitions of Australian investment properties had disappointing audiences, estate agents say.

“Australia and New Zealand are currently just for those permanently relocating,” says James Hickman of Caxton FX. “Many people seem willing to buy in the most unusual of places. But unless you’re moving permanently, the other side of the world is a step too far for investment or holiday homes – well, for the moment at least.”

‘We have winter sun and a solid investment’

Retired businessman Stephen Parker-Swift isn’t content just to buy a home overseas – he’s building his own to get a dream property in what he reckons is a dream location. By mid-September he and his retired wife Diana will have completed their five-bedroom villa next to a golf course at Franschoek, about 40 minutes east of Cape Town and in the centre of South Africa’s glorious wine country.

“We live in Salcombe in Devon, so the need to go away in the summer is limited. Why would we when it’s lovely at home? But we wanted a location which would be sunny over the British winter and would be a solid investment,” says Parker-Swift, who bought the plot four years ago but held off building to see the scale of development nearby as the golf course was built.

The couple, who plan to use their new home for no more than three months a year, looked at different countries but plumped for South Africa. Despite its being almost 6,000 miles from Britain, they say the country is “only a bad night’s sleep away” and, with little time difference, there is no problem with jet lag.

They are also undeterred by South Africa’s reputation for crime. “About 80 per cent of the local residents are permanent and the development has good security,” Stephen says. “Of course there are problems – but that applies to everywhere in the world.”

Source: Telegraph Property
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Britons considering buying property in eastern Europe have been issued with a warning. Currently three property investors in ten think eastern Europe is the place to invest to get the best returns over the next ten years, but buying overseas property is rarely as simple as it seems. “It’s a good idea for buyers to consider higher risk, high return properties to go alongside low risk investments that make up the bulk of a successful housing portfolio,” said Anthony McKay of the Inside Track Group, which commissioned the survey.

“In Croatia and Bulgaria, though, inexperienced investors are putting their life savings on the line in the hope that they can make a fortune. I fear many people may end up bitterly disappointed because they are not aware of the complications within this market.” Inside track recommends that people thinking about investing in any foreign country ask some key questions first.

These are: Will the re-sale value be more than the purchase value? Will the property be desirable to rent? Will the asset be safe? “For the Croatian and Bulgarian markets, the answer is likely to be ‘no’ for at least one of these questions,” said Mr McKay. Inside Track points out that before it recommends any country to property investors, it analyses the political stability of a country, its legal system and also the transport and banking infrastructures. Potential problems for people investing in eastern European property

  • There is no legal organisation that regulates home ownership in Croatia, leading to a lot of confusion  the country’s land registry system can allow the person selling a property not to be the owner
  • Some properties in Croatia have been built without appropriate permission In Bulgaria, investors must establish a limited company before they can purchase land
  • Tax regulations in Bulgaria can be extremely confusing
  • The average wage in both Croatia and Bulgaria is low, meaning most locals cannot afford to rent new build properties, and investors are limited to foreign tenants only

Source: MyFinances.co.uk