A guide to investing in property

The UK property market
A round-up of what’s going on in the residential and commercial property markets
Buying abroad
How and why to invest in a residential property in another country
Global hotspots
A country-by-country guide to the regions offering the best investment opportunities
Let it right
Make sure you take the right steps to residential property investment

Global hotspots

Deciding to invest overseas is one thing, deciding where to buy another. Here, experts make the case for their favourite markets

Spain

“Oh no... not Spain!”, I hear you cry. “Give me Bulgaria, or Florida...Croatia... Istanbul. I hear Russia’s doing very well... but pleeease, not been-there, done-that, run-out-of-steam Spain!” So why is this the place where I still put my money? Longevity. Reliability. Infrastructure. Stability.

Familiarity. Popularity. And of course… Rioja. And tapas and nice beaches and the Sierra Nevada and Rhonda and the golf courses and the year-round climate and sailing and polo and mountain biking and sangria, not to mention low mortgage rates and cheap flights from numerous regional airports.

And, on top of all that, as a buy-to-let investment opportunity certain parts of Spain still stack up brilliantly against the competition. This is especially true on the Costa del Sol. Properties in the areas south-west of Marbella are experiencing strong capital growth.

But more importantly, it’s an area where strong rental income can be achieved all year round. Not only are summer-time rental prices some of the highest in Europe, but the favourable climate throughout the winter months has led to a massive development of world-class golf courses. This makes 30–35 weeks’ annual rental a realistic proposition – with a potential yield of 10–12 per cent.

For a hardheaded investor, well-chosen Spanish property is still a very sensible choice, comfortably seeing off newcomers with aplomb. Contact Ocean View Properties on 0800 977 4517 or visit www.ocean-view.co.uk.

Cyprus

Stephanie Fairhurst, managing director of InvestinCyprus.com, puts the case for investing in a property on the Mediterranean isle:

Overseas markets offer attractive returns, particularly those in countries on the crest of significant economic and positive political change such as Cyprus.

Cyprus boasts 340 days of sunshine a year, an enviably high standard but low cost of living, a very low crime rate and exceptionally friendly and welcoming people. It is now enjoying a property boom as it becomes more popular with overseas buyers. Annual house price in-flation is running at more than 20 per cent. And as a new member of the European Union, demand is accelerating.

Of particular interest to investors, Cyprus enjoys low taxes: capital gains tax is 20 per cent and corporation tax for Cypriot limited companies is only 10 per cent. UK pensions can be received on the island free of UK withholding tax, and foreign residents residing in Cyprus pay only a 5 per cent flat rate of income tax.

The property purchase process is straightforward and assured due to the British-based legal system. And when it comes to choosing mortgages here, the British based banking system helps too.

The potential financial return for well-marketed, quality accommodation in a setting with year-round appeal is excellent and can be well in excess of traditional buy-to-let investments. Cyprus is becoming ever more popular with British buyers but property for sale currently offers excellent value for money so there is really no better time to buy than now.

Contact Invest in Cyprus on 0151 482 5525 or visit www.investincyprus.com.

Dubai

Zul Suriya, director of Homes Dubai, says there are good reasons to invest in a region where East meets West:

Voted as one of the world’s best holiday destinations and recognised as the gateway to the Gulf. Acknowledged as an emerging commercial hub and one of the most desirable places to live on the planet, Dubai is located at the crossroads between the East and the West, with scenic beauty, a modern infrastructure and a vibrant lifestyle. Little wonder it attracts over four million visitors each year.

Recently the government of Dubai has opened up the doors for the purchase of freehold properties in approved projects in the region. The registered purchasers will be entitled to a residence visa for their whole family, to be issued by the Dubai authorities under their standard conditions.

The booming real estate market in this cosmopolitan city is sure to make Dubai one of the most important real estate hubs in the world. There is a wide range of properties to choose from – with unparalleled features in each of them.

Record low interest rates and dismal stock markets are good news for realtors; the Dubai government is behind the real estate boom, and has secondary motives such as attracting wealthy immigrants to the city. As a result villas and apartments are being sold very cheaply.

One way you can judge if real estate is cheap is to look at the yield, or rental return. In the case of Dubai a basic yield of 10 per cent on residential property compares with a 6.5 per cent local mortgage rate. In London 3–4 per cent would be considered a good yield today, so 10 per cent implies a considerable undervaluation of property.

Indeed, the problem is rather the reverse in Dubai. The supply of property is not keeping pace with demand. A city with a GDP growth rate of around 8 per cent sucks in new people all the time and has a burgeoning demand for housing.

That means villa and apartment values should ratchet still further upwards as freeholders take possession. For the time being buying property in Dubai looks a sure-fire winner, if you can find a property to buy. Contact Homes Dubai on 08700 992400 or visit www.homesdubai.com.

Croatia

Dr Karin Fohringer of Belvedere Villas says Croatia is now as good as it gets for overseas investors:

What have Tom Cruise, the world’s most luxurious cruise ships and the discerning property investor in common? They have all discovered Croatia.

Apart from offering unspoilt beautiful coasts and islands, medieval towns, a Mediterranean climate, virtually no crime and great cultural diversity, Croatia is rapidly becoming a hotspot for international property investors. And for very good reasons. As an approved candidate for the next EU enlargement, Croatia has revived its tradition as a holiday destination, with a political commitment to stability, safety for investors and a good tourist infrastructure.

Property price inflation speaks for itself: prices have doubled over the past three years and continue rising, with Dubrovnik, Split and Istria leading the list and already very expensive indeed.

Property and site titles are freehold and foreign investors need government approval. While mostly a formality, this can take up to 15 months and any purchase contract should reflect this point with regard to the payment structure and withdrawal rights in case of refusal. As ever, sound legal advice is strongly recommended.

Croatian taxes are a rather nice surprise: no stamp duty, no yearly property taxes, no difficult inheritance tax and – if property is held privately and for longer than three years – zero capital gains tax. Double-taxation agreements are in place with the UK and Ireland.

A word of warning: not all ownership situations are transparent and an efficient financial market is only now in the making. If you can, find finance at home.

And don’t worry about your rental market: as 70 million Europeans have easy driving access to the country, you don’t have to depend on Ryanair to announce new destinations in Croatia. Contact Belvedere Villas on: 0870 7352 810.

France

Thierry Bernier, director of French firm De Fremery Finances, says investors looking to France should consider a leaseback scheme:

Compared to the cost of property in England, property purchased abroad is perceived as being not only good value but also a good investment.

One of the purchase options, the leaseback scheme, was introduced by the French government about 26 years ago to encourage investment in good rental accommodation. It allows investors to purchase a freehold property, which is rented out through a tourist management company for a period of nine years. A net yield is guaranteed.

Leasebacks can be a very attractive option for investors who are looking for a high and long-term guaranteed rental return on their investment, who would also like to own an attractive pied-à-terre in a well-located town or holiday resort in France to enjoy in retirement.

Properties with leaseback approval offer several advantages:

• High net rental return guaranteed by a commercial lease for a period of nine to 11 years, from some of France’s leading tourist management companies
• Exemption from TVA (the French VAT, charged at 19.6 per cent) on all leaseback properties. However, a pro rata TVA discount would be charged should the property be disposed of within the first 20 years
• Investors rarely have difficulty raising finances for these schemes and foreign investors usually borrow up to 75 per cent of the purchase price
• The rent is guaranteed by the management company or developer for the duration of the lease Leaseback properties are only available in larger cities or tourist locations, where there is a demand for good-quality accommodation. Also, this kind of scheme should only be considered as a long-term investment.

Contact De Fremery Finances in France on 00 33 49353 4490 or visit www.defremeryfinances.com.

Charterhouse Communications

www.whatinvestment.co.uk

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