Overseas property investment buoyant

Thursday, 22 November 2007 12:00 AM

Prices in several overseas property investment markets have remained buoyant despite slowing growth in the domestic market.

According to research from overseas specialists Assetz, property in key markets, including Cape Verde, France and Bulgaria, is remaining profitable for British investors.

"In spite of a continuing slowdown in capital growth across the global property market, it remains an exciting time for investors worldwide," said Stuart Law, managing director of Assetz.

"With a plethora of exotic new destinations coming to the forefront of property investment, there are several emerging markets with the long-term ability to cause more than a stir of interest among the more canny of property investors."

In France reforms by newly elected president Nicolas Sarkozy - including tax relief on home ownership - are helping to drive up prices.

While tax breaks do not apply to foreign ownership they have presented a spur to the domestic market, driving prices higher and providing a boon to British investors.

At present the country is providing just over 40 per cent returns on cash invested, and generates net rental returns of 8.6 per cent.

In eastern Europe Bulgaria remains the runaway leader.

The country presently produces an average of 84 per cent returns on capital investment, well ahead of Poland in second place.

"It is becoming increasingly possible for buyers to obtain the highest possible returns on cash invested, with the increasingly competitive mortgages available on the market, even in less established locations, offsetting any slowdown in price growth," continued Mr Law.

"Investors now have the capabilities to leverage their money in a way that affords them the chance to take home a significant percentage against any initial outlay."

Cape Verde is also another hotspot at present.

The archipelago is generating capital growth of ten per cent annually, according to Assetz, while a booming tourist industry has increased rental yields to around nine per cent.

While there markets are booming at present, there is also profit to be made for those looking further into the future.

"It is easy to be sidetracked by the dazzling appeal of some of the more exotic locations we see entering the scene, but investors must hold out to establish their staying power," said Mr Law.

"Countries such as Turkey and Greece are not causing any great waves on the global stage, but still have relatively low entry costs and more realistic long term rates of growth than Bulgaria and Poland, which have topped the table in recent times with rates of around 20 and 30 per cent."

There was however a word of warning with regard to the American market.

The weak dollar, while making property cheaper at present, is expected to fall further, with house prices also expected to enter a downward trend.

Investors are advised by Assetz to wait until late next year when prices may hit rock bottom and begin to rebound.

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