France top for buy-to-let investments

Thursday, 14, Jul 2005 12:10

Property investments in France are outperforming those in the UK, Spain and Florida, new research shows.

Buy-to-let investors are receiving on average a 92 per cent return on investments in property in France, according to a study by property investment specialist Assetz.

Florida is next up with returns of 81 per cent, while Cyprus lies third with returns of 72 per cent.

Assetz based its figures on the initial capital outlay required, rental yields, capital growth and mortgage costs.

Buy-to-let returns in the UK are 35 per cent, behind both Spain (47 per cent) and Bulgaria (59 per cent).

Despite Florida's position as second only to France, Assetz is warning investors that rising interest rates are likely to lead to instability.

Stuart Law, Assetz managing director, said: "With interest rates rising fast in the USA and a widely forecast faltering in property price growth, Florida is a risk for investors who would gain on rental income alone and would therefore be forced to consider only a long-term investment strategy."

He also had a word of caution for people seeking to capitalise on the boom in Bulgaria.

"Investors should be cautious in Bulgaria's immature market. Property prices are growing significantly in the more established areas such as the Black Sea coastline and the major ski resorts, but many of the apparently 'bargain' deals citing properties for under ?30,000 will be located in the more rural areas and are unlikely to enjoy such high growth rates and certainly not high rental yields."

Investment breakdown by region:

France

Property price: £150,000

Deposit: £22,500

Rental yield: 12.9 per cent

Capital gains: 78.9 per cent

Total return on investment: 91.8 per cent

Cyprus

Property price: £120,000

Deposit: £24,000

Rental yield: 3.1 per cent

Capital gains: 69.2 per cent

Total return on investment: 72.3 per cent

Bulgaria

Property price: £80,000

Deposit: £24,000

Rental yield: 2 per cent

Capital gains: 57.1 per cent

Total return on investment: 59.1 per cent

Spain

Property price: £150,000

Deposit: £45,000

Rental yield: 8.2 per cent

Capital gains: 38.8 per cent

Total return on investment: 47 per cent

Florida

Property price: £125,000

Deposit: £25,000

Rental yield: 19.6 per cent

Capital gains: 61.6 per cent

Total return on investment: 81.2 per cent

UK

Property price: £150,000

Deposit: £22,500

Rental yield: 3.9 per cent

Capital gains: 31.4 per cent

Total return on investment: 35.4 per cent