Beat the crowd to overseas property hotspots

Political stability and an expanding economy are among the key factors investors should be looking out for when buying an overseas property.

That is the message from experts at the Property Investor Show who also urge investors to buy in areas where governments are investing and local transport links are being improved.

They have identified the top ten indicators for picking out the next overseas property hotspots where investors have a higher chance of seeing their capital grow quickly.

"By the time hotspots have hit the media they are old news," said Trisha Mason, founder and managing director of VEF French Property.

"There are still some places where property values remain low and where there is a good opportunity to see strong capital growth within five years but there are not many and they are guarded jealously, so you have to act fast to keep ahead."

The number one factor for investors in overseas property to look out for is an expanding economy. Countries where the economy is growing are likely to see an increase in tourism, boosting rental demand and returns on capital.

Political stability is next up. The crisis in Lebanon shows just how quickly events can move, and overseas property investors would therefore be wise to research the political environment of the country, especially if there has been a history of war and instability.

Government and private investment in the area is another important factor as improvements to local infrastructure and amenities bring money into an area and push house prices up, as do improvements in local transport links.

Overseas property investors who keep abreast of legal issues surrounding the rights of foreigners to buy will also stay ahead of the game. The removal of restrictions in particular countries allows investors to move in and take advantage of the lower property prices before anyone else jumps on the bandwagon.

Nick Clark, managing director of the Property Investor Show, said: "Seasoned investors are constantly on the look out for the next property hotspots and with increasing numbers of people now choosing to invest in overseas property any advice that can put them one step ahead of the masses, giving increased capital gain, is a particular advantage."

If large companies have relocated to an area, that is another good sign. It means employees will have to relocate to the area too, increasing opportunities for corporate lets. The Bulgarian capital Sofia is a prime example of a city presenting just these opportunities.

Other top signs for overseas property investors are planned entry to the European Union, the construction of large scale leisure facilities such as ski runs, golf courses and hotels, the opening up of low cost flight routes and the hosting of international sporting events such as the Olympics. Barcelona is a prime example of a beneficiary of the latter.

"Identifying hotpots needs a lot of market knowledge as prices are obviously governed in most places more by local property buyers than by the overseas property buyer," Ms Mason added.

For more information on the Property Investor Show, see: Property exhibitions in September.

Top ten indicators for an overseas property hotspot
1. An expanding economy
2. Political stability
3. Government and private investment in an area
4. Improvements to local transport links
5. House buying process simplified for foreigners
6. Large companies relocating to the area
7. Planned entry to the European Union
8. Construction of large scale leisure facilities
9. New low-cost flight routes
10. Hosting an international sporting event