Re: Where next for overseas property investment
Hi everyone. I'm new to AAM but am very impressed - excellent forum! I know this is a bit of a broad question but just out of interest I was curious as to where people think the smart money should be heading in terms of overseas property investment. There are lots of posts elsewhere nailing the lid on the coffin of Dubai, Bulgaria etc. Are there any leading lights for capital appreciation and/or decent yields?
For starters, anyone looking to make some money from property has to be looking at a long-term plan; the credit issues with banks worldwide have put paid to any short-term investment possibilities. Be prepared to stay in for four to five years minimum.
My best bet would be the UK, particularly the southern half. Anyone with spare cash can buy now at bargain levels, and the population in that area is set to keep rising. People have to live somewhere, and the UK hasn't had over-supply problems anything like the scale we've seen here.
The USA is a buyers paradise right now, but has hidden isues like property taxes etc that can trap the unwary foreign buyer. With the dollar low though, good rentable properties are worth a punt, especially in places like Manhattan or downtown Boston.
Some of the much-touted places in the past few years are best avoided, like all of Bulgaria, Warsaw, and France. However cities like Budapest are well situated in the middle of Europe, at the hub of road and rail transport networks, and can only improve from the current low base. Where earlier investors are panicking and dumping stock, some opportunities will be found but only in better areas.
Anyone who ever desired a holiday home in the sun should consider buying now. Spain and Portugal are "on the floor", and bargains are to be found if a buyer has the money. You can pay an awful lot less than the brochure prices if you know where to look or if you do your research. If you really want a holiday home in Ireland you can almost get one for nothing right now, but beware of buying in an estate where the rest of the properties may be empty for years, or may be let to some unsavoury tenants by desparate developers with banks on their backs. Only buy a one-off house, or buy in a mature development. Even the latter can be a risk, where a lot of owners are overstretched and have to sell, you can find yourself in a ghost-town quite easily.
As a rule of thumb, if you can buy a rentable property in a good location anywhere that has stable government, at a price well below the cost of the land and the construction, you are probably doing ok. This is happening in a lot nof places now, particularly in Spain and the USA but also in cities like Budapest and some southern English cities.
All of this doesn't mean that people will return to property investment though; there is a quirk of human nature that dictates that people only rush to buy when prices are high and rising, and that they continue to run away long after prices have dropped below sensible levels.