Property
Our property expert shares his overseas investment predictions for the year ahead, plus all the latest property exhibition news
David Cox is the director of overseas property investment specialists Property Frontiers and author of Where to Buy Property Abroad: An Investor’s Guide. +44 (0)1865 202700; www.propertyfrontiers.com; www.aninvestorsguide.com
OUR PROPERTY EXPERT SHARES HIS OVERSEAS INVESTMENT PREDICTIONS FOR 2007, PLUS THE LOWDOWN ON A PLACE IN THE SUN LIVE AND THIS YEAR’S MIPIM PROPERTY MARKET IN CANNES
LAST YEAR SAW the likes of Bulgaria and Dubai dominating media coverage of foreign property markets.
However, as they approach their saturation points, investors are setting their sights on new property markets. With an increasingly wealthy, ageing population and a growing number of first-time buyers trying to get on the foreign property ladder, growth in international property investment is likely to soar in 2007. We also expect to see the market split into lifestyle and pure investment purchases.
But this year may pose risks to previously popular locations. Towards the end of the year we will see a large proportion of Dubai’s off-plan properties completed, adding substantial stock to Dubai’s rental market. The current imbalance with limited supply and extensive demand may begin to equalise or even reverse. Much depends on the Emirate’s ability to continue attracting expatriate workers and other visitors. It is possible that the market will absorb the increase in property stock but equally the Dubai dream may begin to falter. Investors considering buying here should be especially prudent before purchasing.
Similarly, Bulgaria’s exclusivity has been somewhat exhausted. According to A Place in the Sun’s Hot Property Index, Bulgaria is now the number one place to invest, ahead of both Spain and France. However, questions must be raised about whether it has been overdeveloped and how much longer its investment bubble can withstand the market’s mounting pressure, as prices have been pushed excessively high recently. This could well be the year in which a painful correction occurs.
The investment fever which swamped Bulgaria has highlighted investment potential in other parts of Eastern Europe. Its relative underdevelopment, low property prices and rapid GDP growth mean property values in countries such as Poland are set to rise rapidly over the next few years. Since joining the EU in 2004, urbanisation has continued. The country currently attracts $6.5bn of foreign investment per year and as a result is now ranked fifth in the World FDI Confidence Index.
The rise in FDI is indicative of the country’s growing popularity and the confidence investors have in the market and intimates the future strength of Poland’s investment market.
Similar trends are likely to occur in Slovakia, Slovenia and the Baltic states. Slovakia, ideally located in Central Europe, has one of the fastest growing economies in the region and was nominated by the World Bank in 2004 as having the most rapidly improving investment climate globally. Real estate investments in the capital, Bratislava, are stable and predictable. Growth and demand are greater than the national and regional averages.
Equally, the Tatras mountain regions offer excellent conditions for growth, although at present the letting market is limited to ski resorts. Demand is set to stay higher than supply due to Slovakia’s strict protection rules for national park areas, which cover much of the country’s ski zones
Another area likely to gain increased credibility as an investment hub is Asia. China’s status as one of the world’s fastest growing economies (economic growth is expected to be around 10% per year in the near future) is having a huge knock-on effect on various countries around it, namely Thailand and Malaysia and their rapidly growing middle classes. New areas to watch include Japan, which is set to continue on its expansion voyage due to increased investment from small firms, which should result in job growth despite lagging consumption. Also, Vietnam is considered by some to be the new “emerging China” and has recently joined the World Trade Organisation.
As the third largest economy in the world, we expect foreign investment in Germany to flourish. Relatively few Germans are home owners and as a result consistently high rental yields can be counted on, especially in the major cities. The full growth potential of the German economy may soon be realised as structural reforms are implemented and its economic rebound is expected to continue well into 2008, making Germany one of Europe’s hottest long-term investment hotspots.
Home to Panama, Costa Rica and Brazil, Central America boasts more of the world’s key emerging markets. Brazil especially is of significant interest for investors looking to take advantage of a relatively young market. Goldman Sachs predicts that it will be the world’s fifth largest economy by 2035, which, in addition to increasingly frequent direct flights and extensive coastland available for development, makes it even more promising. The country is now home to a million millionaires. This increasingly affluent population is another factor that may appeal to potential investors.
A short journey north from Central America takes us to another large growth market: the Caribbean. Seen by many as the ultimate second-home destination, this is also an exciting investment hotspot with numerous new five-star hotel and villa complexes being built on previously undeveloped islands such as Grenada and St Lucia.
Despite the complexities and considerations that should be thought through when investing abroad, the number of opportunities continues to increase. And, if investment is all about timing, then this greater choice means that 2007 will offer many prospects to get your timing just right.
LIVE YOUR DREAM
BRING YOUR DREAMS of owning a property overseas several steps closer with A Place in the Sun Live.
Taking place at ExCeL in London from 30 March to 1 April 2007, it is the world’s largest overseas property and lifestyle exhibition, covering thousands of properties from over 40 countries
Free seminars offer expert guidance and new this year are the Emigration Show, tailored to anyone considering a permanent move abroad, and the French Pavilion, which will be showcasing all things French. www.aplacein.thesunlive.com
Cannes do
FROM 13-16 MARCH at the Palais de Festivales in Cannes, MIPIM is coming to town. Working as a global marketplace, it provides a unique opportunity for industry decision-makers from 74 countries to meet, develop long-term relationships and show off their latest projects.
Over four days participants collaborate to shape the future of the burgeoning international real estate market. Property talks will include speakers such as Daniel Libeskind, an international figure in architecture and urban design, and Ken Livingstone, the Mayor of London. Conference topics include “The Great Wall of Chinese money” and “Boutique hotels: hip hot property”.
If you are an area hotel developer, a project-bearer or a city or region with strong tourism potential, MIPIM is an ideal way to promote accommodation and tourism development projects to an international audience.
The hospitality industry also has a significant presence. What initially started as a small, targeted event years ago has now been expanded to all exhibiting areas. From resort and leisure developments to marinas in waterfront properties, visitors will be able to get a sneak preview of the tourism landmarks of tomorrow.
Attendance figures in 2006 showed a 21% rise from the previous year. Around 21,000 key-players from the industry are expected this year. And when you need to go off and unwind for five minutes, the Hotel and Tourism lounge boasts the best sea view of Cannes. www.mipim.com
