Spain has long been a favoured destination for overseas property investors, but they could ‘come down to earth with a bump in 2006′, experts say. Growth in Spanish property prices is unsustainable due to oversupply and over-valuation, according to property investment firm Assetz.
With Florida and South Africa also looking like risky investments for overseas property, countries like Bulgaria, Turkey and particularly Southern Cyprus are the likely destinations for property investors this year. Greece and France are also expected to be a good bet for investment in overseas property in 2006. Spain, on the other hand, saw valuations overshoot the mark in 2005 with property price growth of 17.2 per cent to the end of June 2005.
Stuart Law, managing director of Assetz, said: “An oversupply situation has developed and valuations for remortgaging purposes have been over-optimistic in many cases, contributing towards the suspiciously high growth levels. “In addition European mortgage rates are rising and Spain is losing some potential investment to newcomers such as Bulgaria, occasionally referred to as ‘the new Spain’.
Valuations on Spanish property have overshot the mark and investors may come down to earth with a bump in 2005 as prices fall back into line.” Assetz expects overseas property investors to look closer to home in 2006, with the prognosis for Florida and South Africa also poor. “Florida remains one of the riskiest investment zones, with interest rates rising fast and a widely forecast faltering in property price growth,” said Mr Law.
The recent natural disasters also make property on the Gulf of Mexico “very difficult to insure”. In South Africa, an oversupply of high-density apartments and decrease in demand for rental space means “trouble is looming”. more