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London property shortage sends investors overseas

Tuesday, 30 January 2007 12:00 AM

A shortage of suitable London properties is seeing investors with bonuses to spend looking overseas, new research reveals.

The estimated £4 billion of City bonuses predicted for investment in the capital's properties is now finding its way to overseas housing markets according to experts at the Homebuyer Show.

Most estate agents in the traditional investment area of the City and Docklands had less than ten properties for sale at any one time at the end of last year - an all time low.

This means the markets next in line for investment are likely to be France, Spain, Bulgaria and the United States, with more adventurous investors buying homes in Barbados, Dubai and Brazil.

"These wealthy investors will be attracted to places like Dubai where they will be able to avoid paying tax on their purchases," commented Nick Clark, managing director of Homebuyer Events.

"We will also see considerable investment taking place in Europe, both in traditional countries like France and Spain as well as the emerging markets of Poland, Bulgaria and Hungary."

VEF French Property, which specialises in properties in France and Poland, noticed an increase in interest from bonus investors looking to buy overseas.

"What we are seeing is that very few are looking to buy full-time homes in France, but many have been talking with us and buying investment properties in France and in Poland," said Trisha Mason, VEF French Property managing director.

The property markets of Bulgaria and Hungary have also seen increased interest.

David Smith, sales director of Bulgarian Dreams commented: "Over the past few months we have seen an increasing number of people, especially from the London area, wanting to buy larger more luxurious properties of two and three bedroom apartments and putting down 50 per cent or more of the property price as a deposit.

"The inclusion of Bulgaria in the EU has also helped to make the country a more credible investment market and is likely to help grow rental yields."

Other markets gaining investor interest include the US, more attractive thanks to good exchange rates and luxury properties from £130,000, and Dubai, which has proved popular due to the tax-free earnings it offers and the high rental yields of eight to ten per cent.

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