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by Overseas Property Mall on Monday, February 8th, 2010 in Cyprus Property
A UK court has dealt a damming blow to the North (Turkish) Cyprus property market. For years people have bought property in North Cyprus at prices far below the prices south of the division, unfortunately, the reason why prices were so low is now threatening to leave them without a home and with thousands to pay in compensation and back-rent.
by Overseas Property Mall on Monday, September 14th, 2009 in Bulgarian Property, Cyprus Property, Dubai Property, Florida, Holiday Property, Overseas Property Finance, Overseas Property Trends, Spanish Property
Forking out for sunshine holiday homes has burned property investors as house price plunged in the recession, according to a damning new report.
The idea of opening up to the masses what was once a luxury exclusively available only to the wealthy has proved to be an expensive mistake for hundreds of thousands of Brits who dreamed of a place in the sun, say property consultants Savills and HolidayRentals.co.uk in their study.
They say the holiday home investment model is ‘broken’ and actually doubt the market existed.
The market took off in 2000, when UK-owned properties abroad were valued at £10bn.
By 2007, estimates put the number of UK-owned overseas holiday properties at 500,000 with a value of about £58 billion with markets in Spain, Florida, Cyprus, Bulgaria and Dubai taking the bulk of the money. For Bulgaria and Dubai, property prices have fallen through the floor by up to 75% and the banks have stopped lending to foreign investors.
With plunging prices, little hope of locals buying homes on holiday developments and lack of rental income, few investors have any hope of recouping their losses by selling at the bottom of the market when most owe more than their properties are worth.
At the start of the boom, 80% of the UK’s second-home owners financed their overseas property from their own wealth.
The research shows that by the market’s peak in 2007, cash buyers had fallen to 20%, with 80% of buyers taking advantage of overseas mortgage markets.
To make matters worse, many holiday home purchases were funded by taking equity out of UK homes, leaving the investors facing debt problems on both sides of the Channel. Under EU laws, creditors in other EU countries can pursue their losses through UK courts.
A lack of regulation in the property sales industry is also blamed.
Buyers speculated with borrowed money, believing that capital rising property prices would allow them to sell at a profit while rental income covered mortgage payments. Unfortunately, the recession has killed off the model as holidaymakers stayed at home rather than spending out on airfares and apartment or villa rental.
The market, according to the report, was fuelled by low cost airfares, too much liquidity in the mortgage market and that investors took little or no heed of professional, independent advice before signing contracts – and in some cases have not even visited the country where they bought property.
“Even where developers guarantee a gross income yield for a period of two or three years, the net yield is often swallowed by high service charges. In many instances, a net income yield of less than 2% is not uncommon,” said the report.
“There is an average price premium of 37% for property that is served by low cost airlines. Medium distance destinations from the UK, such as the Canary Islands and Cyprus, show the strongest link between house prices and the accessibility of low cost airlines. While this has opened up many new opportunities for buyers, it leaves destinations served by single carriers particularly exposed to the withdrawal of that service.”
by OP-Mall on Friday, February 27th, 2009 in Cyprus Property
A new ruling by the European Court of Justice in Luxembourg might put a lot of expat property owners in Northern Cyprus into financial hardship as they might be forced to pay thousands of pounds in damages to the original land owners, the Greek Cypriots.
by OP-Mall on Monday, February 16th, 2009 in Cyprus Property
Real estate offices in Cyprus are struggling to sell properties and more of them have increasing fears of loosing their jobs. The main contributing factors to this demise is the loss of the British pound against the Euro and the fact that unemployment in the UK reached an all time high – the worst in nine years.
by Overseas Property Mall on Friday, May 5th, 2006 in Bulgarian Property, Cayman Island Property, Cyprus Property, General
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
by Overseas Property Mall on Tuesday, June 7th, 2005 in Cyprus Property, Property Industry News
China Overseas (0688.HK) +2.9% at HK$1.42 on plan to sell construction business, which will then seek separate listing. BOCI positive on move, says spinoff “will streamline China Overseas’ operations and allow it to focus on the more profitable property business”; keeps outperform call on stock as it trading at 51% discount to NAV of HK$2.79/share. Still, stock’s further upside in short term likely limited due to caution toward China property shares; immediate resistance at 10-day moving average at HK$1.46.(RLI)
Source: newratings
by Overseas Property Mall on Wednesday, May 4th, 2005 in Cyprus Property
Britons looking to invest overseas could do a lot worse than buying a place in Cyprus, a new report claims.
Since 2000 house prices in Cyprus have tripled, property group Assetz reports, with an 18 per cent rise in 2004. Over the last 12 months UK house prices rose just seven per cent, Nationwide said last week.
The island’s 340 days of sunshine a year make the country an attractive buy-to-let investment, and these are coupled with climbing house prices and European Union membership.
Additionally, Cyprus is set to join the euro in 2007, which Assetz believes will see property values rocket 50 per cent and mortgage rates fall from the current 7.5 per cent to the eurozone level of 3.5 per cent.
“Prices [on Cyprus] are still considerably lower than in France or Spain – a three-bedroom detached villa with a private pool would currently set you back around £250,000 in a quality location, which would probably only stretch to a large two-bedroom apartment in the South of France,” said Stuart Law, managing director of Assetz International.
And he said that growth in house prices was set to continue, due to interest from buyers across Europe and an undersupply of property.
Assetz points to Paphos as the top current location, with the Polis and Larnaca areas cheaper to invest in and seen as “up and coming”.
However, there are potential problems with investing in the Mediterranean island as well.
“There is a ‘sixty day rule’ for registering land purchases in Cyprus when buying off plan. It is essential for the buyer’s lawyer to register the purchase within sixty days in order to preserve the purchaser’s legal rights over the land on which the building will sit,” Mr Law pointed out.
“If this is not done, the land remains the property of the developer until after the development is completed or beyond,” he explained.
He added: “I would also warn investors to limit their property investments for the time being to Southern Cyprus.
“Since restrictions on movement and trade in the north were lifted when Cyprus joined the EU last year, many Greek Cypriots have returned to land they lost and are claiming restitution or negotiation with one particular high-profile court case in the papers just last week. For this reason I would not advocate buying in the North until these issues have been resolved.”
Source: MyFinances
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