Bulgaria property provides greatest returns

Thursday, 22 June 2006 12:00 AM

Bulgaria has strengthened its position as the overseas property hotspot that will provide investors with the greatest return on investment.

Investors who buy property in the eastern European country can now expect returns of 137 per cent on cash invested, compared with 116 per cent in the first quarter of the year.

The figures from property investment firm Assetz also highlight Greece and Poland as interesting propositions for overseas property investors, but warn investors off buying property in the USA.

But it is Bulgaria that offers the greatest returns, with mortgage rates falling in the spring from seven per cent to 5.95 per cent, and deposits required falling from 30 per cent to 25 per cent.

The country has a growing tourism industry both in summer and winter following the introduction of low-cost airlines and the growth of ski resorts such as Bansko.

A stable resale market has given it greater staying power as an investment destination, while it will also be boosted by EU membership, which is expected in 2007.

Cyprus is in second place for return on investment, followed by France in third, but it is Poland in sixth place that is worthy of note.

The property market in Poland, which became an EU member in 2004, has performed well since the turn of the year, with prices rising between 20 per cent and 30 per cent so far.

Property prices in Warsaw are among the lowest in Europe, so there is plenty of potential for investors to make an excellent return on their investment.

In Greece, there has been something of a turnaround during the last 12 months. House price rises of 7.9 per cent have increased cash returns from two per cent to 25 per cent.

"The choice of overseas destinations available to investors is growing increasingly wide, driven by EU expansion, new low-cost flight routes and the prospect of hefty returns particularly in emerging markets such as Bulgaria and Poland," said Stuart Law, managing director of Assetz.

"More traditional destinations such as France and Cyprus are still stacking up very well against the competition and hold huge appeal for investors who are attracted by a stable growth pattern, uncomplicated buying process and guaranteed resale market."

However, overseas property investors considering the United States should beware that the fall in value of the US dollar against the pound means that for many, the 12 per cent rise in US house prices over the last year will have been wiped out.

In Spain, house price rises of 12.8 per cent mean the country is growing slower than in the previous two years, but with rental yields at eight per cent, the total return on investment is still a healthy 43 per cent.

By comparison, UK house prices are now averaging 6.8 per cent growth, resulting in a 44 per cent return on cash invested.

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