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Location is everything in foreign property market

10th April 2007 | back to article listings BACK    print this article PRINT

Recent reports suggest that foreign property is increasingly being looked at by Britons as a method of boosting retirement income. Workers with an eye to the future are apparently snapping up properties abroad in the hope that either the rental payments received will boost their income streams when they are no longer working, or the property will have appreciated in value by the time they retire, allowing them to sell it and collect a lump sum.

In practice, many buy to let investors will enjoy both the benefit of rental income and the bonus of a tidy profit if they choose to sell at an opportune moment in future years.

The avenue of foreign property acquisition is one that has been opened up in recent years due to a number of factors. In part, the ever-increasing price of property back home has encouraged some people to look abroad for a property that may offer a better value investment that what could be procured by spending the same money back home.

Also, according to property brokers Principal International, "it is not only investors with portfolios that are looking to expand, but also the general public who are concerned over the ever-decreasing pension funds and are securing their future by looking further afield into overseas property".

Another key factor is the rise of the budget airline. Cheap air travel has served to open up foreign markets like never before. People are now able to purchase a property abroad that can serve as a holiday hone for long weekends throughout the year – and can also be used to generate income on the buy-to-let market.
One report released at the end of last year by Savills Research, in partnership with Holiday-Rentals.co.uk, found that a property that is near a low-cost airline route will be on average just under 40 per cent more valuable than if that same property were located elsewhere - even if that 'elsewhere' should be an airport, but one that was not served by budget carriers.

Proximity to the airport was found to be a key factor. Although properties within ten miles of the airport were found to be around 40 per cent more valuable, when that radius was increased to 80 miles, the price benefits were fairly negligible, on average around the two per cent mark.

Jacqui Daly, of Savills Research says the statistics should be taken into consideration by buy-to-let investors, who will find a property near a budget air-route "generally easier to let and less likely to suffer from long void periods". Therefore it seems the, as with any property purchase, the oft-repeated maxim of ‘location, location, location' once again rings true.

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