Where
is the Sophisticated Property Investor Putting his Money?
By Bruce
Stronge
|
|
.
The Traditional Favourites
Over the last five to ten years,
UK investors buying property abroad have generally stuck to the traditional
favourites Spain, France and Italy. With prices a fraction of those in
the UK and a guarantee of more sunshine, these markets offered plenty of
scope for capital appreciation, rental return and holiday home use. However
as prices have steadily risen in these countries, yields have hardened
in response and an eventual over-supply particularly in parts of Spain
has occurred. In today’s environment property investors are looking further
east for yield and capital appreciation opportunities. |
|
..
|
|
Emerging Markets
- A year ago ten more countries joined the EU, expanding not only the
Union, but the hunting ground of the international property investor. Most
investors have come to the conclusion that the market cycle here in the
UK is at it’s peak, and the more sophisticated investor has already started
moving his money into the new EU countries. Many astute investors started
buying there a year or two before EU accession, particularly in more developed
cities like Prague and Budapest where the real estate markets were relatively
more mature. So prices in these cities had already increased by up to 25%
in the year up to May 2004, however there is still a long way to go especially
in the other capitals of this region. |
It’s Just Economics!
Putting your money into an emerging
market surely has to be profitable because by the very definition of ‘emerging’,
you should assume growth, and therefore return. EU accession is a massive
catalyst to the growth of an economy as the EU is committed to backing
these countries in a bid to creating comparable economies to those of it’s
current members. Government incentives, new political regimes and tax reforms
are creating an ideal climate for foreign direct investment, higher employment
and GDP growth, which all directly affect the property market.
The relative attractiveness of the
older EU capitals from a corporate location point of view is changing according
to a DTZ report on the Emerging EU economies. The report concludes that
Bratislava, Berlin, Prague and Budapest will be the main beneficiaries
in this new economic geography mainly due to their location and catchment
areas, the associated low costs especially labour, skills base and the
economic growth prospects of these four cities. In less than a year since
the ten countries joined the union this is already evident, particularly
in Bratislava as Slovakia wins some of the biggest foreign investment contracts
in the region..
| Going Forward in
2005
I think most would agree that for
long term steady growth complemented by relatively few risks investing
in bricks and mortar at home in the UK cannot be beaten for a good solid
pension plan. Over the last 10 years the more adventurous have strayed
off the beaten path to Spain, Italy and France in search of holiday homes
and to diversify their portfolio. There is now however a new and far more
exciting playground for us property investors which is sponsored by the
European Union, has the most diverse culture in the world, it’s experiencing
unrivalled GDP growth and it’s property market is urrently way undervalued. |
|
Not only has the UK property market
levelled out, it looks to stay that way for the next couple of years and
the traditional overseas investment spots seem to have lost momentum and
have been overshadowed by something bigger. The pioneers have cleared
the stones from the road to Eastern Europe and 2005 is a great time to
arrive at the party!
..
| Bruce Stronge
is one of the founding partners of Slovak Investments, a company offering
investors the complete real estate solution including research, investment
property deals, property advice, tax consultancy, legal and mortgage contacts
through to after sales care and property management..
Slovak Investments
was set up in order to fulfil the needs of a large number of property investors
who might not have the time, experience or contacts to profit from the
current EU and in particular the Slovakian real estate boom. See our website
for more information Slovak
Investments - where you can subscribe to our free Slovak
property newsletter and receive alerts when new property deals are about
to be released. |
|
.
Links to
other related sites and resources:
..
.
|
