Investment Watch: Property bonds prove attractive alternative
Property bonds are an increasingly attractive alternative for investors, according to TheMoveChannel.com´s Investment Watch. The monthly report, which ranks demand for the portal´s listings, found that a US property bond scheme generated the most interest in December.
The bonds, which promise fixed yields of up to 16% per annum, attracted even more attention than discounted bank-owned apartments in Spain. The one-bed repossessed flats, located near Vinaròs, were reduced in price by over 50 per cent with mortgages available directly from the bank. But the affordable holiday homes only received the second highest number of enquiries on the site, with the bonds´ combination of low price (£9,360) and high returns proving hard to resist.
Indeed, out of the 10 most popular listings on TheMoveChannel.com in the final month of last year, nine were rental opportunities as buyers continued to prioritise income during a tough financial climate.
Time-sensitive deals, such as apartments in the Rhones-Alpes ahead of the ski season and Pattaya condos with a discount expiring at the end of the year, generated a significant response, pushing the listings into third and fourth place respectively.
Other investments were geography-dependent, with a buy-to-let opportunity in Devon (fourth place) providing a more familiar market for UK buyers compared to a spa resort in Hungary. The latter country, though, benefited from its appeal to European investors, accounting for two of the top 10 listings (seventh and 10th).
Bulgaria and Spain made up the rest of the chart, alongside a buy-to-let villa in Syracuse. But when it came to returns on investment, the bonds topped traditional bricks and mortar, combining the appeal of US real estate with the trend towards tightening belts.
Ray Withers, co-founding director of Property Frontiers, explains why the US investment properties won over so many buyers: “Managing a buy to let on the other side of the world is just too challenging for some investors that don´t have the time to dedicate. That doesn´t mean they don´t want to be in the US market, though.
“The crash in US property prices followed by the recent beginnings of a recovery has created a great deal of interest in US property. Investors see it as one of the greatest property investment opportunities in a generation. However, property ownership can be expensive in the US with taxes and community fees etc.
“With this particular investment, investors have the opportunity to profit from US property without the hassle and risk of direct ownership. They get to earn regular, fixed returns which are above market yields and have a defined, fixed exit strategy after 5 years. It´s basically the easiest and safest way for smaller scale investors to invest in the USA.
“People also understand the business model that enables the attractive returns to be delivered. The company we have partnered with (who has a strong track record and evidence of doing this) buys properties in distress, renovates them and sells them on for a realistic profit. Continuously reinvesting means that the profits are compounded and the returns are delivered. Underpinning it is a recovering US property market and a team of experts on the ground.”
Notes to Editors
Founded in 1999, TheMoveChannel.com is the leading independent website for international property, with than 400,000 listings in over 100 countries around the world, marketed on behalf agents, developers and private owners.
The website address is http://www.TheMoveChannel.com and the office address is 24 Jack´s Place, Corbet Place, Spitalfields, London, E1 6NN.