Overseas Property A better return on your savings?

15/05/2009

Despite the economic downturn and the slowdown in consumer spending there is increasing evidence to suggest that savers are looking to invest in overseas property because of the poor returns they are getting for their savings in the UK.

However, with the soaring prices of Euro zone properties and due to a weaker pound, more unusual locations have started to become quite popular with those who are looking for a better return on their investment.

Locations such as Brazil, Greece, Egypt, Montenegro and the Dominican Republic have experienced a surge of interest from international buyers looking for the ideal investment on overseas property and holiday homes.

Brazil:
Not only does Brazil host some of the world’s finest and unspoilt beaches, it also has one of the most robust and expanding economies in South America. In the last ten years tourism has grown by nearly 200% which is good news for buyers.

Brazil has a diverse landscape and rich culture, a warm climate and most importantly it’s affordable. The cost of living in Brazil is just 20% of that in the UK. One of the most popular locations in Brazil to buy property is the carnival city of Rio de Janeiro which boasts 45 miles of white beaches. The northern beach resorts, such as Bahia, also present fantastic potential for buying property and have attracted a lot of interest from UK buyers.

In terms of investment, Brazil is the top choice, with predications of an economic explosion, it’s calculated that Brazil will have the world’s fifth biggest economy by 2035. Property in the hotspot of Bahia is currently attracting as much as 20% annual capital appreciation and other areas are expected to rise at an equally healthy rate.

Greece:
Every year thousands of people from the UK flock to Greece for their summer holiday, however Greece has become not only a desirable holiday location but has started to attract increasing interest for holiday properties and investments.  Over the past month Greece has risen from 7th to 4th most popular holiday destination with increasing numbers of people looking to buy property there.

Although Greece is within the Euro zone countries, property in Greece is at present relatively undervalued, there is excellent potential for capital growth. Some areas of the mainland are seeing appreciation of up to 25% per annum.

The Greek islands are favourites for the British while the mainland is more popular with continental Europeans. However the Peloponnese peninsula has become increasing attractive for those seeking a less established market.

Egypt:
Egypt has been a popular destination for British holidaymakers for some time, not only does Egypt have a rich culture that is steeped in history but it has 12 months of sunshine a year. Egypt has also started to benefit from the new surge in overseas property buying, as prices in the country have always been far lower than its closes rivals, Turkey and Cyrus. 

The two most popular regions with the tourists who flock to Egypt are the beautiful and sunny Red Sea coast; and the noisy and captivating capital, Cairo. The holiday property market in Egypt is still very much in its infancy, as such, there is no guarantee of positive capital appreciation. However it has had a successful track record for the past few years. In fact, annual growth of between 20 and 30 % has been recorded.

Montenegro:
Since gaining independence in 2006, Montenegro has become a chic holiday haven for the rich and famous. Montenegro also has the euro as its currency however prices are around 40 per cent cheaper than in neighbouring Croatia.

Combined with deep blue seas, unspoilt beaches, crisp lakes and rivers, rugged mountains, rustic villages and medieval towns, Montenegro’s tourism industry is predicting strong growth, which in turn has created the conditions for an emerging property market.

Money can be made from letting, to tourists or to the domestic market, depending on location. Prospects for long-term growth seem promising, as the local population grows richer, mortgages become more widely available and the international property market becomes established. Rental yields can reach 8-10 %.

The Kotor Bay region, at the northern end of Montenegro’s dramatic coast, has traditionally attracted the majority of foreign property investors, including Germans, Italians, Russians and the British.

Dominican Republic:
The Dominican Republic continues to be one of the most favourable countries for overseas property investors. With a tropical and maritime climate, the Dominican Republic is prone to a wet season each year with periodic hurricanes that afflict the Caribbean from time and time, otherwise the weather is warm with little variations between summer and winter.

Prices are astonishingly low compared to many of the other Caribbean islands; this is attracting many people who are looking for a holiday home. The Dominican Republic makes an ideal destination for investors given the climate, the relaxed lifestyle and the availability of property.

Fully equipped 2 bedroom apartments in Sosua are going for as little as £50k so there are still property bargains to be found. Property development on the island tends to be spread around the coastal areas, with Puerto Plata on the north coast and Punta Cana among the most popular locations.

Due to the nature of the economy in the Dominican Republic, tourism is the biggest driver behind recent growth and foreign buyers have been very active in the marketplace for many years. Predictions are that the tourist trade in the Dominican Republic will continue to grow for the next decade, which is tempting many more to invest.

Final Thought:
Buying a property abroad is a major decision, so do as much research as possible, visit your chosen location at different times of year and stick to an agreed budget.

Before deciding where and what sort of property to buy, explore the resale market thoroughly, even if you have no intention of selling. Circumstances change, and you should always have an exit strategy.

At No1 Currency we offer a range of products to cover your currency needs and to ensure the smooth transfer of your funds. From immediate Spot Price contracts to longer-term Forward and Time-Option Forward contacts, as well as a Limit or Stop Loss Order which protects you from adverse currency movements and ensures that you get the most out of your overseas property investment or holiday home.

We are on hand to provide sound guidance and advice with regards to market tensions and currency movements, so if you are thinking of purchasing property abroad give us a call today on 0800 953 0221 or visit our website www.no1currency.com
 

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