Nothing symbolizes Japan’s bubble economy, or its subsequent long slump, more than real estate. Now, after dropping by as much as 70%, real estate prices are ticking up, signaling a renewed Japanese economy.

A major restructuring of the nation’s financial system, along with an injection of foreign capital and the introduction of publicly traded real estate investment trusts, are driving the real estate revival, according to Wharton faculty and real estate analysts working in Tokyo. “The no-growth swamp is over. Not only is real estate coming back, but it’s coming back strong,” says Wharton real estate professor Susan Wachter.

For the first time in 16 years, land prices rose in Japan’s top three markets — Tokyo, Osaka and Nagoya — during the 12 months that ended in July. Commercial land prices were up 2.6% while residential property was up O.4%. In addition, new development is visible in Tokyo, rents are on the rise and investors are returning to the market.

Speaking at the fall members’ meeting of the Samuel Zell and Robert Lurie Real Estate Center at Wharton, Michael Pralle, CEO of General Electric’s $48 billion real estate unit, said Japan is his top pick among current global real estate hot spots, including China, India and Germany.

GE has been in Japan since 1998 and owns $3 billion in real estate assets, including 120 office buildings and 9,000 residential units. Last year, it formed a partnership with Shinsei Bank to increase its holdings. “We like Japan a great deal,” said Pralle, noting that GE is drawn to Japan by strong yields, attractive land prices that are still near 25-year lows, tax advantages and improving economic conditions overall.

According to Wachter, because real estate is viewed as a long-term asset, renewed confidence in the industry reflects optimism about the long-term prospects for Japan’s economy. “The structure of Japan, Inc. has been substantially reformed and there is no going back at this point.”

In addition to banking and other financial reforms, Wachter says a key element of today’s interest in real estate is the government’s willingness to abandon politically popular, but economically unjustified, public works projects in rural and agricultural areas. As a result, a drain on government spending has been eliminated, and more deserving projects in urban areas will receive more support. “There’s no more business as usual,” says Wachter. “This is a long-term structural reallocation that will not only affect Tokyo, but also the second-tier and even third-tier cities.”

The Rise of REITs

Another driver of the real estate recovery is the same cure that was used for the United States’ real estate crash following the savings and loan collapse of the 1980s: real estate investment trusts. Japan enacted new laws creating real estate investment trusts, known as J-REITs, in 2001. Now there are more than 30 J-REITs in operation with assets of $30 billion.

Nomura Real Estate Holdings raised the most money in an initial public offering of any Japanese company this year, trading up as much as 13% during its first day of trading in October. Nomura’s debut topped the record set a month earlier by the Nippon Commercial Investment Corp., a real estate investment trust of Pacific Commercial Management.

Andrey Pavlov, a visiting professor of real estate at Wharton, explains that because REITs can be exchanged at any moment, managers are responsive to the market. Better response to market conditions helps prevent disconnects between supply and demand that lead to boom and bust cycles in real estate. “REITs are a great source of capital because they provide fairly-priced financing and there is a lot of discipline due to that immediate and direct connection to shareholders,” says Pavlov.

Concerns are overblown that investors in REITs will be able to pull out abruptly if they unexpectedly need access to their capital, forcing REIT managers to unload long-term assets at what might be a low point in the market, he adds. “That’s typically not a problem. REITs get the money from investors to buy the assets but the REIT itself is unaffected. There is no cash flow change.”

REITs in Japan, and elsewhere, are a better way to finance real estate than bank lending, Wachter notes. Banks often structure deals with incentives or fees that encourage lending, leading to transactions that are often not aligned with market demand.

REITs also are structured with tax incentives that tend to draw international capital to Japan and other markets, she notes. REITs pool money from the sale of stock and use that to make investments in real estate. The shareholders then receive dividends paid out of profits earned by the REIT on rents or property sales. The dividends are not taxed.

For example, Nippon Building reported a 37% rise in net income to 9.85 billion yen ($84 billion) for the six months ending in June. The REIT paid out a record dividend of 19,391 yen, up from 17,046 yen for the same period a year earlier.

Wachter also points out that REITs are not closely correlated to the stock market and can provide balance for institutional portfolios, another draw for foreign capital. Finally, REITs bring transparency and better analysis to the market in which true value is often hard to gauge because shopping malls and office buildings, even homes, don’t come up for sale everyday. “Once the funds are large enough, then you can have analysis with an entirely new level of sophistication, which again brings discipline,” says Wachter.

The Japanese mortgage market is also moving toward greater securitization which will give investors another reason to invest, Wachter adds.

Following World War II, Japan created the Government Housing Loan Corp. (GHLC), to provide easy residential financing for homeowners. During the bubble years, as housing prices skyrocketed, Japanese homeowners were offered numerous types of exotic mortgages, including a 100-year mortgage to be paid off by the borrower’s grandchildren.

As part of the nation’s economic reforms, GHLC in 2001 was converted from an issuer of loans to a packager of mortgage-backed securities. By 2003, GHLC had securitized $8 billion in Japanese mortgages. Next year a new agency, the Japan Housing Finance Services Agency modeled on Fannie Mae in the United States, will begin securitizing loans written by private financial institutions.

Poised for the Future

Richard Georgi, a guest lecturer in real estate at Wharton and managing partner of Grove International Partners, a global private equity firm, estimates that Japan’s economy bottomed out in 2002 and 2003. While hopes of earlier recoveries based on fiscal and monetary stimuli were subsequently dashed, Georgi says the current optimism is deserved because the government and the Japanese people have made significant changes to their economic system. “We are now starting to see some emerging growth patterns that we think are sustainable because they are on the back of real reform,” says Georgi, who is based in Tokyo.

Rents are starting to tighten in Tokyo, which Georgi notes is double the size of Manhattan and four times the value. “This is a supertanker economy, so small changes can result in huge movements of capital.”

As the nation’s deflationary spiral comes to an end, interest rates will likely continue to rise. As that happens, investors sitting on yen-denominated Japanese government bonds will seek new asset investments. The capital-starved real estate industry will make an attractive investment, Georgi predicts, adding that the rest of the developed world has been in recovery for some time and is now priced high. Other countries, he says, will need to work off a real estate bubble created after the sharp interest rate declines that followed the September 11 terror attacks. “Japan is poised for future growth, although it is still at a low base compared to historic norms.”

Foreign investment has played a part in Japan’s recovery, but will not be a dominant force going forward, Georgi suggests. Changes in the nation’s postal saving system, he notes, could free up vast pools of household savings that will flow into real estate. “Foreigners are here, and they have been playing a role in injecting liquidity into the market. But the most important transformation looking ahead will be the return of domestic capital to the real estate market,” says Georgi.

Yasuhiko Watanabe, senior advisor at Mitsubishi Estate Co., says the Japanese real estate revival started in spring 2005. Vacancy rates for Class A office space in central Tokyo are now less than 1%, compared to 4% to 6% a year ago. Rents in the desirable Marunouchi district, located between Tokyo Station and the Imperial Palace, are up 20% from a year ago. “Probably we are now in a position to worry a bit about too much too soon,” he says.

Japan’s strong corporate comeback and infusions of domestic and international capital are feeding the real estate resurgence, says Watanabe, who also cautions that excess liquidity in the global economy could set off a financial crisis if the system experiences a shock. “The market could lose its steam if, for any reason, today’s high level of liquidity becomes vulnerable. Geopolitical risks as well as financial and economic risks might play a significant role in the outlook for the market.”

In addition to the new REIT investment vehicles, Eric Perraudin, managing partner of Japan Management Consulting in Tokyo, says ultra-low interest rates are contributing to the recovery. Investors can borrow 80% of the value of a building with a non-recourse loan at a rate of 2%. At the same time, building regulations governing the density of buildings have been eased, allowing developers to build more space on less land.

Pavlov warns that despite confidence in the real estate turnaround, the Japanese economy is still in a delicate state and policymakers will need to steer a careful course between stimulating growth and guarding against inflation. “As the economy picks up there will be more demand for real estate,” he says. “It is very important that, in the face of the up-tick in demand, there is sufficient availability of funding, whether its bank loans, equity investment or private investment. You don’t want to be in a credit crunch. Even if people want to buy and develop real estate, if they can’t get the financing, nothing happens.”

According to Pavlov, there is often a fine line between too little credit and too much. “Let me emphasize that you should never stimulate or encourage policy with the availability of cheap or under-priced financing. It has to be fairly priced,” he says. “But you want to make sure lenders and other sources of capital don’t overreact to the previous crash and stop lending altogether. There needs to be a golden balance between sufficient financing and not under pricing…. It’s not an easy thing to do.”

Perraudin notes that prices for commercial buildings have recovered about 30% to 50% from the bottom reached in 2002-2003. However, the gains are concentrated in Central Tokyo, Central Osaka and Nagoya. In other major cities, the market is flat, and small cities and rural areas are still experiencing declines. “Demand for real estate in central areas is limited,” he says. “Demographics are bad, with the Japanese population and workforce shrinking.”

He points out that land prices in some regions are still artificially high, propped up by subsidies for agricultural use and ownership of property by debt-ridden public institutions and governments.

John Percival, a Wharton adjunct finance professor, says that despite all the reforms that have been made in Japan, real estate is likely to remain cyclical. While companies and financial institutions have undergone major reforms, there remains more cross-shareholding between banks and other businesses than in the United States and much of the rest of the world. “Real estate is coming back,” says Percival, “but that’s the good news and the bad news. If there’s another bubble, then we’ll go through this whole process all over again.”

Source: Knowledge@Wharton

· Overseas homeownership up 300% in 10 years
· 1.3m nationals may live outside UK by 2025

Drive through almost any pretty French or Spanish town and there is bound to be a derelict villa asking for some love and attention. Just a lick of paint and the help of a few local tradesmen will transform a wreck into a holiday home for friends and family.

Today, a second home in the sun is now the boast of more than 300,000 people, according to a study of foreign home ownership - more than three times the figure recorded in 1995.

While Spain and France lead the list of destinations, Bulgaria, Romania, Hungary and the Czech Republic are rapidly gaining favour with Britain’s affluent homebuyers. Montenegro, which features in the latest Bond movie Casino Royale, is also on the shopping list of British bargain hunters. Budget flights, booming property markets and the rise and rise of the super rich pensioner have fuelled the boom, which is continuing to gather pace, according to the report.

By 2025, it says, there could be around 1.3m British nationals living in other countries.

A comfortable home with a better guarantee of sun is one of the chief reasons for taking the plunge, with 38% of buyers saying they will holiday in their new home or eventually use it as a place to retire.

Not everyone is aiming to move abroad. The study shows that four in every 10 buyers of foreign property believe it will be an investment either to supplement their pension or for their children.

However, the authors of the report warn that many potential buyers fail to investigate how much they will need to pay to buy and maintain their property and how much they will pay in fees and taxes.

They said the attraction of a warm climate, cheap cost of living and easy access to a second home overseas can blind buyers to many hidden perils.

Mike Warburton, of accountants Grant Thornton, authors of the report with City firm Lombard Street Research, said: “Purchasing a property abroad has important tax implications. Contrary to popular belief, you are still subject to tax on your offshore income and capital gains if you are a UK resident and live here. And, if the UK tax system is not complicated enough, the purchaser of a property abroad has to cope with a local tax system that may be culturally dissimilar to our own.”

The report says that today 2% of the UK population owns a property overseas. The typical owners are either pensioners with their main residence abroad, or affluent fortysomethings, usually aged over 45, who take their holidays abroad or use it as an investment.

Retired people like France and Spain less than the familiarity of an Anglo-Saxon environment and prefer Australia, the US and Canada.

A separate government report in the summer revealed that the number of families in England who own a second home in Britain or overseas had soared past half a million for the first time. The data revealed that in 2003-04, 298,000 English families owned a second home in England, 26,000 had a second home in Scotland or Wales, and a further 178,000 owned a property overseas.

Spain has long been a favourite of British holiday and retirement home buyers, and just over a third (35%) of all overseas second homes are located there, says the department. Another 24% are in France. Only one in 100 second homes abroad are in Italy.

Most buyers say the quick and cheap access offered by budget airlines is the initial temptation. Tanya and Steve Taylor of south London bought a small home near Barcelona for £50,000 three years ago. Since then a small renovation project has included putting £500 worth of solar panels on the roof. To cut C02 emissions on summer holiday visits with their three sons they also bought a second hand camper van on eBay to drive rather than fly, though flying is still part of the deal.

“We have to pump the water by hand and use lots of candles,” said Mrs Taylor.

At the other end of the spectrum, Mark Harrison, a Harley Street doctor, bought a ski chalet in Switzerland for £1m last year that allows him to ski straight on to the piste.

“It’s fantastic and is so much cheaper than other places in the four valleys, especially Verbier which is just next door, and similar places in France and Italy,” he said.

Mr Harrison, who has five daughters aged one to 11, will not be renting out his second home. “It’s an all-year-round resort which means we can go mountain biking in the summer.”

Over there

Most popular countries for second homes

1. Spain
2. France
3. United States
4. Bulgaria
5. Turkey
6. Cyprus
7. Greece
8. Italy

Source: Observer Nov 18 2006

DUBAI, United Arab Emirates There is no stronger belief in the saying, “If you build it, they will come” than in Dubai.

Because it has the smallest oil holdings of the seven United Arab Emirates, Dubai has chosen to diversify by building itself into a tourist and trading mecca. In the past decade, development has exploded, from the ultra-luxury Burj Al Arab hotel to business zones like Dubai Media City and attractions bordering on the surreal, like Ski Dubai, an indoor ski slope 400 meters, or 1,300 feet, long.

Now, on the emirate’s last remaining undeveloped land fronting the Gulf, the government is building a city called Dubai Waterfront. At the moment, it is a vacant beachfront dotted with cranes. When it is finished, it will be a self-contained community larger than Manhattan, with housing for 700,000 people.

“People think it is a dream, but people are wrong,” said Khaled Issa Al Huraimel, general manager of the project for the developer Nakheel. “What we start here, we finish.”

Dubai’s population of 1.2 million is projected to grow to 4 million by 2020, and tourist arrivals are expected to grow to 22 million a year from 8 million. “At the moment, we don’t have the capacity to handle that,” Huraimel said.

Planning for the new city began in 2002, and a master plan was developed last year with the New York architectural firm Gruzen Samton. Development of the infrastructure has begun, and the entire city is expected to rise from the sand - and the water, on a series of artificial islands - over the next 10 years.

When it is finished, the city will form a giant crescent arching around The Palm, a palm- tree-shaped island resort and residential project so big it is visible from space. The city will comprise five major sections, with the centerpiece being the Madinat Al Arab, a city center with businesses, shopping and one of the world’s tallest buildings, Al Burj.

Huraimel said Al Burj might end up being the tallest building in the world - it will be competing with the Burj Dubai, a mixed-use building already under construction.

The planned heights of both buildings have not been disclosed.

“We won’t know until they are finished which one will be taller, but we do know that the two tallest buildings in the world will be in Dubai,” Huraimel said. (The world’s tallest building now is Taipei 101 on Taiwan, at 509 meters.)

Dubai Waterfront will have 12 kilometers, or 7.5 miles, of natural beachfront, 10 kilometers of canals and a harbor two kilometers wide. There will be 10 mixed-use zones, ranging from residential areas to commercial and retail space, resorts and areas for schools and recreation. As many as 200 hotels are planned.

“It’s a blending of a city into communities,”‘ said Jordan Gruzen, a partner at Gruzen Samton.

The residential zones will include housing aimed at middle-income brackets as well as luxury homes, Huraimel said. “We do have to protect the lower-income levels,” he said.

Luxury sales in the emirate have declined in recent months, with some real estate specialists saying prices had reached unsustainable levels.

In the first phase of the project, Dubai Waterfront Co., a division of Nakheel, is spending about $4 billion on the infrastructure of the new city, including roads, a sewer system, desalination plants to ensure the water supply, electricity and a light rail system. Huraimel said the value of the land alone, before any improvements, was $30 billion.

Once that work is done, private developers will be sold individual plots in the city, of which 70 percent will be residential and 30 percent commercial. The first sites, prime areas along the downtown beachfront zoned for residential and resort purposes, sold for $13 million in 48 hours in December. More will be sold this year.

The new city will be an equidistant 35 kilometers from the existing Dubai city center and Abu Dhabi, and just a few kilometers from the new Jebel Ali airport, which, with six runways, will be the largest in the world.

Huraimel was confident that Dubai would attract the business and residents to make the city work. “In 15 years, the perception of the Middle East will change,” he said. “We are a modern, diverse society in Dubai. The city is safe, there are no taxes, the weather is perfect for at least nine months out of the year.”

Also, in March the emirate said it would allow foreigners limited freehold ownership and formal 99-year leases, just one of the property law changes being made across the UAE to attract investment.

But Huraimel conceded that Dubai had a big job to do in overcoming the West’s negative image of Arab countries. “Some have said that Islam and the West is a clash of civilizations,” he said. “Dubai is like a city of dreams. This is not a clash of civilizations. This is the opposite.”

Gruzen and his team are already convinced.

“Dubai has absolutely amazed us,” said Joe Navarro, another senior associate at the New York firm. “Each time we go there’s a higher degree of confidence. This isn’t just a flash in the pan.”

Huraimel said that the new city would mesh with existing projects; the city’s own light rail, for example, will link to the Dubai metro trains now being built.

While the Gruzen architects have been involved with other large-scale projects, including building a smaller city from the ground up in Iran, the Dubai project is unique.

“They’re building their own factories to make products,” Navarro said. “Anything you need is provided for. This is more than hype. It’s got real money behind it.”

Source: IHT

Related links: Detailed Master Plan of Dubai Waterfront

FLORIDA, Cape Town and Sofia in Bulgaria were the top performing residential markets last year, according to a new report from property firm Prestige. Prices rose by more than 20 per cent in these locations last year.

However, Prestige warned investors to shy away from the Costa Del Sol in Spain, where prices only rose four per cent last year. This was due to ongoing legal difficulties related to land ownership and rampant over-development.

Florida was the fastest growing residential market last year, soaring 27 per cent. However areas with the sharpest rises in prices could also be subject to the biggest falls, with the rampant Florida market seen by some doom merchants as an indicator of an unsustainable US property boom.

Bulgarian capital Sofia saw its residential housing market increase by 22 per cent in 2005, closely followed by the Western Algarve, which jumped 20 per cent. Property prices in Warsaw increased 18 per cent last year.

The increase in overseas house prices has been partially fuelled by pensioners spending their retirement abroad. Figures in the UK have shown that over 1m pensioners are drawing their state pensions abroad, up from 770,000 in 1997. The flow of investor cash abroad has also been hastened by falling or sluggish rental yields in the home markets.

Timeshare and shared ownership properties have been endorsed by a major new study undertaken across the region.

Revealed for the first time at today’s exclusive conference at Dubai’s icon of hospitality, the Burj Al Arab, the symposium included 18 presentations and panel discussions covering every aspect of the leisure real estate market.

Commissioned by RCI Middle East, part of the world’s largest holiday exchange and rental travel group, RCI Global Vacation Network, the research findings formed the basis of a programme that attracted an audience of high profile executives from around the world.

Stephen Holmes, Vice Chairman of Cendant Corporation, parent company of RCI, provided the keynote address, along with Awadh Al Ketbhi, Director of Conventions at Dubai’s Department of Tourism and Commerce Marketing.

The research focused on the burgeoning Arab tourist market and the holiday preferences of Arab travellers. More and more of them are expressing a preference to holiday within the region and this survey is essential reading for all those involved in the local hospitality and leisure sectors.

Fieldwork was undertaken during March across a sample of nearly 1,000 high-earning nationals from Saudi Arabia, Kuwait, Iran, Egypt and the UAE. Undertaken by the Pan Arab Research Centre, (PARC), the face-to-face interviews were analysed and edited by NorthCourse Advisory Services, a member of the Cendant group that provides comprehensive consultancy and turnkey solutions for prospective developers around the globe.

The research revealed that the concept of shared ownership products is ideally suited to the higher income Middle Eastern national. Also, that many Saudi and UAE nationals are more inclined to consider buying a timeshare property over and above other options. Longer stay purchases, known as Fractional Ownership, typically involving a share of a larger number of weeks rather than just one or two, were also a major preference, especially amongst Kuwaitis and Egyptians.

The study demonstrated that the entire sample travels regularly and that holiday choices are largely based upon destinations that offer good family solutions and shopping rather than activity and adventure tourism. Food and fine dining is definitely high on the agenda for all respondents in the survey.

Topics of particular focus during the research were 4 leisure travel options - family holidays, religious travel, big trips and festive travels; the clear leader is family holidays. Many travel in larger groups, with extended family, friends and household staff; the larger, luxurious type of accommodation found within shared ownership developments, can fulfil these requirements perfectly. Notably, 40% of Saudi Nationals take household staff away with them, and 46% of UAE Nationals take their parents.

Dubai and the UAE as a whole are the most popular destinations for all nationalities, especially when considering a timeshare purchase. The potential is significant - the Middle East market alone could support USD$540 million in annual timeshare sales. With regard to fractional ownership, the most attractive locations were Dubai, Sharm El Sheikh and Makkah. Although this is a smaller market in terms of volume, gross annual sales are estimated at USD $642 million, greater than for timeshare due to higher-value properties. Another exciting new shared ownership product is religious timeshare, which has received an extremely positive response amongst Muslim communities across the globe, who all have a common interest in travelling to Makkah.

These findings clearly demonstrate the major potential for shared ownership developments within the Middle East, where to date construction within the Gulf region exceeds USD$1 trillion, according to MEED reports. Within Saudi Arabia the value of new projects has doubled to more than USD$200 billion in the last 12 months.

Vivienne Noyes-Thomas, Managing Director of RCI Middle East, commented ‘today’s symposium is a unique forum packed with ground-breaking information for all those with an interest in property development, hospitality and sales. With close on 150 delegates from 15 different countries, it has drawn substantial interest from developers, government organisations and the entire leisure real estate industry.’

Other topics covered by speakers from the US, Europe and Asia at today’s symposium included The New Generation of Luxury Timeshare, Condo Hotels and Buy to Use and Let property models. Spanish tourism marketing expert Euologio Bordas set the background with a review of Global Tourism Trends and Shared Ownership within the ‘Dream Society’. Key business leaders from the local community - including Elaine Jones, CEO of Asteco, James Wilson, CEO of Nakheel Hotels and Resorts, Patrick Smith, VP Asset Management for IFA Hotels and Resorts - examined the opportunities for these new business models in the regional property and leisure development marketplace.

Source: AME Info

Banco Halifax Hispania, the Spanish arm of the Halifax, has revealed new research that suggests nearly a third of Britons (29 per cent) would be interested in buying property abroad.

The US and Australia were the most popular destinations amongst those who had thought about looking overseas, with each picked out by nine per cent of those asked. The most popular European destination was Spain (six per cent).

The increase in demand for foreign property, particularly in Spain, is reflected in the Official Social Trends Report (OSTR), which notes that Spanish property accounts for 27 per cent of all Britons’ second homes abroad.

The OSTR also found that spending on overseas property has increased by 45 per cent in the UK in the last four years.

Head of European operations at Halifax, Ian Smith, said: “Over recent years we have seen a huge increase in the number of UK residents wanting to buy a property in Spain.”

“Our mortgage products are designed with British residents in mind,” Mr Smith continued. “We certainly understand the type of mortgage products that British customers require, based on our vast experience in the UK and our knowledge of British attitudes and culture.”

Banco Halifax Hispania works alongside a UK-based operations team, making the process easier for British customers who wish to invest in property abroad without the hassle of directly contending with a multitude of foreign companies and institutions.

This, along with the fact that customers can deal with their mortgage lender in English rather than Spanish, is said by many consumers to be a major selling point.

Source: Fair Investment

A huge demand for homes in the sun has seen Britons’ spending on properties overseas increase by 45 per cent in four years. The number of them owning second homes abroad now exceeds a quarter of a million people, at 257,000.

The official Social Trends report today says British families have invested more than £23 billion in overseas property, with most of that invested in Spain and France although increasing numbers are turning to Canada, the Caribbean and New Zealand.

The Office for National Statistics says more than a million British families own a second home, the vast majority of which (72 per cent) are in England, with five per cent in Wales and Scotland, and the remainder overseas.

“In recent years the increasing affordability and accessibility of foreign property markets has contributed to a rise in the number of UK households that own second homes abroad,” the report says.

“Between 1999-2000 and 2003-4 the number increased by 45 per cent.”

Spain accounted for 27 per cent of all second homes abroad, followed by France at 20 per cent.

But in 2003-4 over a third of all homes owned abroad were outside Europe, with property ownership by Britons increasingly common in places such as the United States, Australia, Canada, the Caribbean, India, New Zealand, Pakistan, South Africa and Sri Lanka.

Alex Wright, director of the currency specialist HIFX, which assists Britons buying property abroad, said there was strong demand in more adventurous locations.

“Spain and France are still the most popular destinations but we have seen increased interest for investment property in Bulgaria and Dubai. Even Canada and Switzerland have seen their fortunes rise and new locations pop up all the time, including Egypt, Brazil, Poland, Hungary and the Czech Republic.”

The Association of British Travel Agents estimates that home ownership abroad will double over the next five to seven years. The Spanish Ministry of Tourism predicts that more than one million foreigners will set up home on the Spanish coast in the next six years, a figure expected to treble by 2025.

Sarah Vaughan, a property specialist and director of a public relations firm based in Spain, said: “Realistically the minimum you can spend is £145,000 for a two-bed apartment, or £210,000 if it is in Marbella.

“The Costa del Sol is not the place to buy if you are looking for a good investment. You can still buy places for a song in northern Spain and inland, but northern Spain tends to be rainy and without the bars and if you are inland you might not be near the airport, or have a phone connection, or the property might need a lot of work.”

Recent research suggested some young Britons were looking abroad to take their first step on the property ladder because house prices were too high in Britain.

A poll of more than 4,600 adults, conducted by YouGov, found that nearly half of the 18- to 29-year-olds questioned planned to buy abroad, with two thirds saying their foreign investment would be their first property purchase. More than 80 per cent of those first-time buyers said they would rent out their property.

Source: Telegraph 25/02/2006