Positive Overseas Investment Reports

kathryn said:
Hi Auto320

Where would you advise someone to invest their money overseas at the minute?
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For what its worth, and I know lots of people will disagree, but you usually make more money if you swim against the tide a little.

For that reason, here are two good middle of the road tips, remember where you heard them first..

1. Panic is setting in to the expat market in Budapest, based on a few riots outside the parliament building. In fact, the actions by the govt in recent weeks bode very well for the future, and remind me of the "fiscal rectitude" approach that set the basis for the so-called Celtic Tiger here. As often happens in panic situations, there is now lots of good value in Budapest, with discounts available if you try hard enough. Returns are actually quite good, upwards of 6% available if you buy in the right place. I would rate Budapest as a "buy" right now.
Downside: Currency risk, but not a huge issue. In many soft currency areas the populace keep their savings in hard currencies, and property prioces tend to track the euro or dollar and not the local currency.

2. Many investors are looking at Slovenia, and prices have hardened there in recent months to a point where good value is hard to find. I would advise anyone with a long-term plan to look instead just across the border at the Carnian Alps region of Italy, where prices for the same properties are actually cheaper and often give bettrer rental returns.
Well worth looking at in this area is the concept of Albergo Difuzo (not sure if I have that spelling right). In essence, this means "scattered hotel", and it means that a hotel exists in many holiday towns, consisting of a central reservation/reception with the rooms scattered around the town. You buy a building or an apartment in the building, and join in the scattered hotel business. The hotelier provides laundry, cleaning etc, and you get a good return. There is a good summer rental market here from bikers, walkers and foodies, and a lot of money has been spent on the ski area here in the last year. I don´t have any further details on this one, don´t believe that any Irish agents even know where it is, but if you have an interest in Slovenia, take a few days across the border as well and have a look at this area.
Just a word of warning, be careful of the legals in Italy, get good advice from a law firm with international links before doing anything.

Well, you did ask!
 
I must say I'd agree with auto on Budapest at the moment. Wise words indeed! One of our largest buyers of furniture is based in Budapest and whilst she is a little upskittled at the moment she has said to me that she will buy more property there in the not too distant future. She has bought a few properties there over the last 4 years (her biggest acquisition was her distribution warehose) and quite shrewdly in my opinion. She expects good value to be had just because her more lilly-livered countrymen will offload. I've been looking along the border with Romania and in Debrecen just recently. I started about 3 weeks before the current unrest and defered to her for advice. Her current counsel is to wait another week or two and then bargain VERY hard with the locals.

I'd also say that the current situation in Hungary must have a knock-on effect for the rest of the country. At least I'm hoping so. There's a lovely little site in Pocsaj that I've had my eye on for a bit now.
 

One Irish agency that has a subscriber newsletter last week circulated details of a number of apartments in the 13th district (I think, I don't have it to hand) where the buyer had walked away and lost his deposits. The agency had agreed with the developer to resell the properties with the benefit of the deposit, i.e. at a discount equal to the abandoned deposit. I know of a couple of other instances where people bought similar properties in the past week or so, when the developer was happy to sell and allow for forfeited deposits in one instance, and where a discount was negotiated in another case.

These things are available, if you know where to look. Budapest will provide value over the next couple of months until confidence returns to the market.
 

So if you have to make even one visit a year for any reason it will only cost you about one and half years rental income .

€16.5K - did you get a mortgage or just put it on your credit card ?
 
I bought a property in Bansko Bulgaria, It might rent and it might not , although i recon it will, i went there and found the place fantastic.
I went to about 5 real estate agents over there and eventually got a deal i got a 10% dicount on the sale price ( for a higher deposit) and i got it fully furnished that was almost 8 months ago. I went twice to the area before i committed.
I think it is good advise that i have seen here, check out the area very well before you buy.

I think Germany is a good area to invest hope all goes well
 
auto320 said:
As often happens in panic situations, there is now lots of good value in Budapest, with discounts available if you try hard enough.
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Unfortunately, these discounts are probably only likely in the new build market and the outlying second hand market where oversupply exists, sometimes due to cancellations as was mentioned above. Some investors seem to have put down deposits with little research and probably too quickly, in the expectation that their apartment will appreciate overnight. Then, at the first sign of trouble, even before they have completed the sale, they leave the market just as quickly. In my opinion, it's not a good approach to making any sort of investment.

The second hand market in District V and surroundings has remained strong throughout from both Hungarian and foreign buyers. I don't think that there is much scope for any further discounting here as fairly priced, high quality apartments in this area continue to be easy to sell. One of my Hungarian friends set up an appointment to see an apartment off Szabadsag Ter, which had just come on the market the previous day, but it sold before he even got a chance to see it. This market doesn't really seem to have been affected by the political and economic situation and some investors I know (including myself!) have actually been quietly adding to their portfolios in recent months.

Unfortunately, poorly researched and inaccurate journalism such as David McWilliams' article in the Sunday Business Post caused some panic among Irish investors, which seems to have caused some people to re-evaluate their decision to invest here, but I don't think that people living in Budapest feel the same.
 

I think you're a little off the mark there auto as the man in question has an extensive knowlede of the area and continues to have dealings there. And his advice was given out for free (in the form of an article) and not one of those paid for infomercials from other "experts" on foreign property or tax laws.

The Hungarian economy is wobbling for a while now and it will regain shape, but for those "flippers" it's not too certain what they will gain from their investment.
 
Hi Almo,

I agree with you that most flippers won't do well in Budapest. If it was that easy, financially astute Hungarians would be doing it!

I don't know how much involvement David McWilliams has in the Hungarian market, but I know that many of the facts he used in this article were incorrect and much of the analysis was off the mark. He said that interest rates were 12%, when at the time they were 7.25% (now 8%). He ignored the fact, as auto320 suggested above, that property prices in the best parts of town are influenced by the euro value at any time and suggested that the movements in the value of the forint dictate everything. He also suggested the likelihood of a currency devaluation in Hungary several times over, drawing a comparison with Ireland in the 1980s and early 90s. The major difference between these two situations though is that Hungary is a growing economy with high employment, significant FDI and a high GDP deficit of 10%, while Ireland was in a recession in 1987 with a 120% GDP deficit.

My point is that I don't think that investors should be so totally swayed by one article either in favour or against a particular investment location and over the past few months, I've come across a few (Irish) investors, who have made huge financial decisions based on a single paragraph.
 

Obviously discounts resulting from an abandoned deposits are only a feature in the new build sector; the pragmatic approach of developers contrasts with most private sellers who will snaffle the deposit and continue to offer the property for sale at the same price. However it is also true that the higher end resale properties, where foreign buyers have a strong influence on the price, have been easier to buy for the last few weeks, with around 10% discount available (depending on the seller's attitude).

Because of the nature of this business, I tend to be on a large number of mailing lists for financial newsletters etc, and one this week from the dealing room of one of the Irish commercial banks is interesting. Their analysis of the effect on the Forint resulting from the riots is essentially that the currency took a hit and then recovered; they do not envisage any issues going forward. Again, as I said earlier and as has been echoed by other posters, property in Hungary tends to track the euro in any case.

The reality of all this anyway, from my observations, is that a lot of smart money is moving into Budapest right now; as ever, canny investors realise that every cloud has a silver lining and that there is always opportunity in uncertainty.
 

Ya - because i really bought it for the rental factor!
I bought it hoping that it's going to increase in value. Why does anybody buy an overseas investment?
Germany is in negotians with Denmark on constructing a fixed length bridge ver the Femahrn Belt. The minister for transport from both countries have signed an agreement for the bridge, which is expected to be open in 2015.
So my property in Germany could be worth a lot more in ten yers time and there's also the benefit of not having to pay any cgt.
Sarcasm doesn't suit you!
 
purplealien said:
So my property in Germany could be worth a lot more in ten yers time and there's also the benefit of not having to pay any cgt.
Sarcasm doesn't suit you!
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You do know that you will have to pay cgt in Ireland even though you may not have cgt in Germany? I'm assuming you are resident in Ireland.
 
Yes D.K - i do know that - 20%.
I'm hoping the property will be worth €100,000 in 10 years time.
€20,000 on cgt - €80,000 to me. Even if it's only worth half that in 10 years time, i would never have been able o save €40,000 in 10 years. I've somewhat of an aversion to saving.
 
I have also been looking at the Rostock development in Germany, a 1 bed appartment for EUR33,000 with a guaranteed 6% net yield for 10 years with a management company running it and paying into my account every 3 months. The guarantee, I believe will be written into the contract. Anyone any experience of this and management companies ?

With the guaranteed return for 10 years it seems like a reasonable deal for the SSIA money and for that price its hard to imagine it could be worth less in 10 years.

So thinking that all sounded very good, some research on the area told me that following the reunification of Germany after 1989, Rostock lost its privleged position as the principal seaport of East Germany and became just another medium-sized city, now located in one of the poorest regions of reunited Germany. Because of this, and despite large infrastructure investments, the city's economy has declined. More importantly, its population dropped from 253,000 in 1988 to less than 200,000 today, primarily due to emigration to more prosperous western regions of Germany but also to suburbanisation. Moreover, Rostock has a demographic problem, with about 200,000 inhabitants today, forecasts announce a population of 170,000 in 2020. An awful lot of hopes for the area seems to be pinned on the bridge being built between Denmark and this part of Germany.

I am completely new to this and I thought this was a positive overseas offer although de-population sounds a bit grim in terms of trying to rent the property in a few years, never mind sell it ? Has anyone else been looking at this development ? Naturally the agents are positive and they have produced articles on a growing German economy but I would welcome any input from others who may know more about this area.

Sorry if this is a little off-subject, but I didn't see this particular investment mentioned in other posts.
Many thanks.
 
ronny78 said:
With the guaranteed return for 10 years it seems like a reasonable deal for the SSIA money and for that price its hard to imagine it could be worth less in 10 years.
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You have to ask yourself what it was worth 10 years ago and why it is so cheap now. If the demographic profile is so poor in the future you would have to question the assumption that it will definitely increase in value. However, the German economy is on the up so who know?

Another thing is that 6% of 33,000 is 1980 euros per year which works out at 165 euros each month. I suppose that isn't too bad a return but in Rostock city at the moment, the cheapest 1-bed I could find was 290 euros (and that was tiny and horrible), and the average was around 350/month. this represents a significant amount that the management company is creaming off the top although, that said, at least your money would be guaranteed.

Have a look at this site

[broken link removed]
 
You can find much cheaper one beds (rents) than 290 euro/mth! Lots of flats from just about 3 euro/m2/mth, so say a 50 m2 one bed at 150 euros is not uncommon. Obviously best areas and top property will be a bit more. In general I think 6% on single units is not bad. But, I'd certainly look at at least a dozen other German cities that have far greater growth potential than Rostock ever will. One should minimize the risk, not maximise it.
 
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