Eastern European Property

This country has the world’s fastest-rising house prices, so move quickly to buy a slice of the action.

Stephen Barrett, a property investor, was surprised on his last property-hunting trip to Estonia. “I went to buy a town-centre apartment and came back with a 45-acre forest with bears and elk,” he says.

Barrett’s forest in Parnu, a beachside town of colourful wooden houses, is an hour and a half’s drive south-west of the capital, Tallinn, and cost £59,000. He has also invested in a £45,000 villa at Parnu’s Tahkuranna Beach and a £65,000 apartment in Tallinn, both through Churchill O¼.

“Once I get planning permission, I could sell the land for £100,000 profit. Or I could divide the land into 80 plots and sell them for £20,000 each, or develop it myself as a rural resort, which would be popular with holidaying Scandinavians,” he explains.

Estonia is enjoying an economic boom, with 9.2 per cent growth last year and 30 per 1cent property price rises over the past year. It has the fastest-rising property prices in the world, according to the estate agent Knight Frank’s global house-price index.

Tallinn, a burgeoning IT hub, is the focus of much of the investment. Once the new commercial and residential Twin Towers building goes up in the business district, apartment prices are expected to hit £5,000 per sq m.

Many people believe that Parnu will be the next Tallinn. “Tallinn’s market is very tight but Parnu is the place to be,” says Chris Tonkinson of Crichton Developments, which is selling apartments on a golf resort near a white-sand beach in Valgeranna, and in Audru, from £50,000.

Investors can buy shares in Crichton. “It’s for people who want to make money from new developments in Estonia without the worry of owning a property,” says Tonkinson. For each multiple of £7,500 up to £30,000, you get a 1.25 per cent share in the firm.

“I’m guaranteeing that investors will get their money back after one year and retain their percentage share in the development company,” Tonkinson explains. “Then you are looking at returns in excess of 250 per cent within three years. You can only sell your share once it’s built.”

Plots of land are also being snapped up in Parnu. “You have to be here to get in quickly,” says Stephen Barrett. Lee Williams, the MD of Churchill O¼ in Parnu, reports that nearly all of his clients are British and most are after plots of land. He recently sold two hectares beside the river to a British buyer for £45,000 – its value should rise by 36 per cent a year.

“The land registry here has a sophisticated system that allows you to see aerial photos of the plot, so you know what you are buying,” says Williams. “The house-buying process is quick and transparent, and it’s so cheap to borrow money, with mortgage rates from 3.1 per cent, that most of our clients borrow up to 75 per cent. With prices starting low and rising fast, there is little to lose.”

Although Tallinn has seen impressive property price rises since it joined the EU in 2004, David Laity of Property in Estonia predicts another big lift before Estonia adopts the Euro, provisionally in 2008.

“Money is flooding into Tallinn, but given the old town is a world heritage site, property is still reasonable, with starting prices of around £50,000 for a small studio in the centre,” he says.

The snag, he adds, is that demand is so high that new apartments sell out as soon as they hit the market, mainly to Estonian buyers.

If you intend to rent out your apartment, being within a short walk of the old town is vital. Ilmarine is a new development in a prime position on the disused harbourside, which is being transformed into a cultural zone. The current phase, with studios from £31,000 for 31 sq m studios, has sold out, but the area is due to see more development. At Luha Street, a 10-minute walk to the old town, 34 sq m one-bedroom apartments start at £48,500.

“Estonia is seeing a boom without a big element of speculation,” says Laity. “In five years, it will be one of the richest countries in Europe.”

Source: The Independent

The Black Sea Resort of Sochi Hopes to Gain a Wider Audience

During the Soviet era, the Black Sea resort of Sochi was synonymous with summer recreation a retreat for everyone from high-placed officials to numerous vacationers from across the Socialist bloc. Fifteen years into Russia’s makeover, the town is still trying to rebound from decline and the inept management of regional infrastructure. Now, local and federal authorities are striving to remake the place into a first-rate year-round international resort while also bolstering its standing as Russia’s undisputed summer capital.

With over three million annual visitors, Sochi may finally be outperforming its main competitor, Ukraine’s Crimea, but it can hardly match the combination of sensible prices and competent service found in European resorts. Still, the intrinsic appeal of the area’s exquisite scenery, coupled with a commitment to a sustained and systemic overhaul, bode well for Sochiâ’s revival.

rest of story here

Property investment for many in the UK has become a central part of planning for the future and the European market is understandably attracting much of the interest.

While there is of course a natural attraction to the basic idea of investing in property overseas, experts point out that the returns can also be exceptional.

In an assessment of some of the legal aspects of foreign property investment, Legal Week Global concludes that UK investors perceive “an expanding European investment horizon” where the outlook for European property investment is brighter than in the UK and stronger than other asset classes in Europe.

Among Europe’s established property investment markets, the report lists Paris in France as well as Madrid and Barcelona in Spain.

A secondary tier of investment popularity is also identified, however, with Cyprus and Bulgaria named among the key hotspots. While much of the interest is in commercial property in the form of retail parks and office space, residential property investment is also singled out, with Bulgaria one of the most notable examples for this kind of project.

Investors going into the European property market without any guidance from property experts are inevitably exposing themselves to unnecessary risk, but the Legal Week report concludes that despite “spectacular” performance during the last year or two, it is generally imagined that the market is capable of delivering further profit growth.

Purchasing an investment property overseas inevitably involves a degree of risk and it is an issue that all investors need to weigh up before making a decision.

Until very recently, Bulgarian property was seen as one of the high risk options, but steady growth in Sofia, the Black Sea resorts and in the ski towns such as Bansko, has convinced many that the market is becoming a much safer bet.

EU accession remains one of the key issues for many, however, and it is certainly a development that will reassure many of the country’s potential for growth.

In terms of rental potential, investors are much more likely to opt for France or Spain and buy-to-let investment is indeed becoming one of the most popular strategies for UK buyers.

Deciding whether a buy-to-let investment will be worthwhile is perhaps a more complex process than many appreciate, as it involves a consideration of not only rental income but also long-term capital growth.

Writing for the Scotsman, Steven Currie has recalled an incident in which he was asked whether a particular property would be a good residential letting investment.

Mr Currie estimated that rental income would be in the region of £650 per month or £7,800 a year, which would produce an unspectacular gross annual return of less than five per cent. Despite this, he concluded that the property was very much worthwhile because capital growth was ultimately a more important factor in terms of the end value.

Buy-to-let investment abroad can be particularly subtle in this respect and investors need to evaluate the respective benefits of potential rental income and capital appreciation before making a final decision.

Source: Assetz Property News Service

Romania, the home of Dracula, has been revealed as the best place to make money from overseas property. It topped a list of the 20 best places to make money from overseas property whose upper reaches were dominated by former Eastern bloc countries.

Poland, Slovakia, Slovenia, Hungary and the Baltic Tigers of Estonia, Latvia and Lithuania all featured in the top ten of the list compiled for A Place in the Sun: 20 Best Places to Make Money. The Channel 4 show presented by property expert Amanda Lamb commissioned statistics from a leading accountancy firm to predict how quickly countries’ economies are expected to grow. The ranking takes into account where house prices are over or under-valued at the moment and factors in how much money can be made by renting out a property.

Romania came out top of the list for profit from overseas property because while houses can currently be bought for as little as £5,000, prices are expected to increase by 30 per cent in 2006 as the country prepares for EU accession next year. Over the next ten years, property prices in Romania are predicted to increase by 414 per cent.

Second on the list is Poland where returns over the next ten years are expected to be 393 per cent, while returns on the Baltic States, in fourth place, are expected to be 356 per cent. Portugal, in third place, is the highest placed western European country with predicted returns of 360 per cent, and completing the top five is Sweden with returns of 352 per cent. Old favourites such as France, in 17th place, and Spain, in 19th place, were languishing well down the list, but are still likely to be popular with Brits because they offer a more certain environment in which to invest. “People are always asking me where the best place to buy property abroad is,” said Amanda Lamb.

“The answer depends on whether you’re looking for a holiday home, a pure property investment or a combination of the two. But one thing’s for sure making money from property has never been so important to so many of us. ‘This year’s 20 Best is really interesting because it focuses purely on where you could make the most money from buying property abroad.’ A Place in the Sun’s 20 best places to make money from buying overseas property

1. Romania
2. Poland
3. Portugal
4. Baltic Tigers (Estonia, Latvia, Lithuania)
5. Sweden
6. Belgium
7. Slovakia
8. Slovenia
9. Finland
10. Hungary
11. Luxembourg
12. Germany
13. Czech Republic
14. Ireland
15. Austria
16. Netherlands
17. France
18. Italy
19. Spain
20. Cyprus

Source: AboutProperty.co.uk