Assetz® News - Assetz Property Investment Tracker France for show, Cape Verde for the pro

Assetz Property Investment Tracker France for show, Cape Verde for the pro

23rd May 2008 |

france for show, cape verde for the pro

old faithful and young go-getter lead the way for overseas investors

Detailed research from Assetz, the UK’s leading property investment specialist, brings together all the key investment criteria for the UK and overseas property hotspots to form a quarterly investment Tracker.

Bulgaria holds firm at the top but opportunities becoming fewer…

Those purchasing a home overseas in the last five years will have found few destinations to rival Bulgaria for strong capital gains, with 102% on cash invested recorded in the latest tracker. However, major oversupply in the country’s most popular tourist areas means that this is set to lower significantly in the near future. Assetz has always advised caution to investors in these areas, and rental returns have now started to fall into the negative. It is very likely that average house price growth statistics have been misleading, with rural property price growth masking poor performance in the tourist hotspots for at least the last 12 months.

Brits choose France for safe investment…

France remains the most secure destination for British investors seeking a safe haven in Western Europe, with modest capital growth and good profit potential from rented property. Thanks to the perpetually high demand for homes and all-round appeal to holiday makers, total returns on cash invested are hugely attractive and are forecast to continue rising for the foreseeable future. France has some of the lowest required mortgage deposits of any country (very important for investors), yet it has minimal sub prime problems, due to its loan affordability legislation.

All-round package means bright future for Cape Verde…
The tourist industry is thriving in Cape Verde with the arrival of some of the most influential tour operators, an increased number of flights to the area and major infrastructure developing quickly on several of the islands such as Santiago and Boa Vista. The islands are gearing up for a sustained boom period over the next few years as developers begin to meet the international demand for rented accommodation and holiday schemes. Rental returns are where the major potential lies in Cape Verde, with high rental yields sustainable at around 9%. However capital growth has also remained solid at 10% and this will only increase as demand continues to grow in this all year round holiday destination, which is quickly becoming known as the European Caribbean.

Cyprus looking strong…

For actual investor returns, the capital gains in Southern Cyprus offer one of the strongest outlooks across the board. With low mortgage rates and reasonable entry costs, the potential total return each year is huge. House price growth over the past twelve months surged to 16%, and looks set to continue (albeit at a more moderate rate) with strong tourism and low-risk investment opportunities. From January 1st 2008, Cyprus adopted the Euro, forcing interest rates to fall in line with the more competitive Euro rate, making borrowing cheaper and further strengthening the property market here. Locals are buying £1million villas in Cyprus, which helps to explain the market’s overall strength and its less speculative nature.

Germany stirs into life but still too early for big growth…
After 10 years of static prices, Germany began to see house price growth over the last year, following multi-billion euro investments from UK and US based funds. Only a very small proportion of residents currently own their own homes (under 40%), but the market is heating up in major cities such as Berlin and Munich, which boast a vibrant lifestyle and increasing appeal to businesses and tourists. Typical prices remain low but are slowly starting to increase and are expected to rise substantially over the next five to seven years. However, the credit crunch will delay take-off in Germany and significant house price growth is not expected until 2009. This leaves the buying opportunity window open for a little while longer.

Stuart Law, Managing Director of Assetz comments:

“UK investors looking to buy into overseas property need to consider two fundamental aspects – strong capital growth, combined with a reliable income. We always advise investors to take a long-term view with regard to choosing a property and a healthy balance between these two facets is required to meet your ultimate goal of becoming cash positive on your investment.

“There remain some fairly safe bets when it comes to overseas investment in today’s market. These are generally countries that appeal the most to British holiday makers. For example, France, with its close proximity to the UK and wide ranging appeal, and Southern Cyprus, with its warmer climate and stable capital growth, offer the balance required for a robust investment.

“Increased loan to value (LTV) mortgages are rare in the current climate but 100% mortgages in France are now more common than ever before. This offers the incentive to enter markets with significantly lower costs, resulting in higher gearing and magnifying real returns on cash invested over the long-term.

“There are also some destinations that offer fewer guarantees, but can yield excellent results for the canny investor, if they are willing to take the plunge. Emerging destinations always offer an element of risk, but if the formula is right then investors will reap the rewards. There is little substitute for a dedicated seaside holiday resort with year-round sunshine. Cape Verde remains the number one destination currently offering these potential rewards, with the continued benefit of a 12 month season, low entry costs, robust capital growth and increasing potential for rental returns, as major tour operators and airlines begin to arrive in droves.

“Germany and the US represent two global giants whose economies have faltered in recent times - impacting on the respective property markets in differing ways. Whereas I believe there is still some way for prices to fall further in the US, Germany is now starting to turn, with house prices set to rise significantly over the coming years.

“With the dollar likely to strengthen over the coming months, buyers intending to purchase in dollar-denominated destinations such as the US and the Caribbean, should move quickly as exchange rate changes could outweigh the benefit of waiting for further price drops.”

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4254.html. Alternatively, please see our full press release archive.