Credit Crunch Cribs – Invest in a property bargain on foreign shores
Now that the UK is officially in recession the government have confirmed something that most of the general public have known for quite some time, that it is getting more and more difficult to ignore the financial problems that are beginning to affect a wide proportion of the population. A large part of the problem is that UK banks and lending institutions have substantially reduced their lending and therefore there is a distinct lack of finance in the market, thus meaning that in turn increasingly fewer people are able to afford to buy property, which has come as quite a shock given the higher and higher levels of lending in recent years.
There is, however, still hope for those looking to buy a property abroad, where there are some excellent properties available at highly competitive prices and where those who are able to buy on a budget without finance – be it for relocation, retirement or as an investment – are able to make their money stretch a lot further. Therefore, if you are looking to move your money away from volatile banks and towards foreign shores, here are some examples of the cheapest and best value-for-money properties available:
Spain
Although there has been some bad press about Spain in recent times, it does not seem to have diminished in its popularity with us Brits – having been voted ‘Top Holiday Destination in 2008’ by the Office of National Statistics (ONS), with a total of 12,029,325 holidays attributed. And with an average property price in the country according to leading Spanish property portal Kyero.com still standing at €247,000 in Q4 2008, just €1,000 less than the same period in the previous year, prices are still holding strong, this emphasising the continued popularity of the market.
It is possible, however, even in these tough times, to find a bargain in Spain, especially if you choose the area and property carefully. For example the town of Lorca in the popular Murcia province offers good buy-to-let opportunities with investors able to capitalise on the student market of the new Lorca campus of the University of Murcia, as well as the fact that average property prices for a two bedroom property in the town are €162,000 – 14.7% lower than the Spanish average of €191,000 for the same sized property (according to Kyero.com).
Mike Hamilton, Managing Director of local property experts Casas de Lorca recognises the buy-to-let potential,
“The main investment approach that has seen larger investors profit substantially on an ongoing basis is buying properties for rent within the larger commercial and university cities in Spain where domestic demand is showing strong growth. In fact, the city based buy to let property market in Spain has suffered nothing of the negativities of oversupply, with many urban areas actually suffering from a restriction of supply leading to increased demand. For those buyers who are able to purchase without the need for credit, Lorca is one place that offers some well-priced properties with excellent buy-to-let potential to the domestic market and with the Spanish government also offering potential incentives to buyers, this is an excellent opportunity.”
To take advantage of the cheap prices in Lorca and the rental prospects, Casas de Lorca are offering 2 bedroom apartments just 3 minute’s walk from the new Lorca campus, making these ideal student accommodation. With a guaranteed rental for a three year period and a sound long-term investment, prices start at €135,000/ £118,226 for a 2 bedroom apartment – even less than the average price for a 2 bedroom property in the town! And for those looking to make a slightly smaller investment, 1 bedroom apartments are also available from €78,000/ £68,308.
Caribbean
If, instead, white sand and pristine seas are more your scene, and you are looking to fulfil your Caribbean dream, you may think this is out of reach given the current climate – but you’d be wrong. There is one Caribbean option available to suit almost any budget that would certainly fulfil any dreams of a tropical paradise, as well as dreams of good rental returns. The Caracola Beach and Spa Resort, marketed by Emerging Earth, is situated on Isla Margarita, the Caribbean island outside of the hurricane zone yet with all the sun, sea and sand one would expect – making this the ideal year-round property purchase.
Situated on the Caracola Beach (Caracola is the name of a Conch shell indigenous to Isla Margarita), the resort overlooks long golden sands with sparkling waters on the edge of the island’s main town, Porlamar. One bedroom apartments start at just €79,000/ £71,029 and two bedroom duplexes are from €190,000/ £170,833, a price not out of reach to those looking to buy without finance and with excellent facilities that include a spa, gymnasium, beauty salon, high end retail outlets and beautifully landscaped gardens as well as restaurants and bars this is a bargain buy. A rental return of 7% per annum net for 10 years is also guaranteed, making this an excellent investment choice and if you are looking to purchase for your retirement, this project has the added benefit of being SIPP eligible, offering tax efficient freehold ownership.
Egypt
When looking to purchase in the current climate, one idea is to focus on property located outside the euro zone to avoid the further contraction of the strength of the Pound against the Euro that has been predicted to continue through 2009. One alternative to the euro zone is Egypt – a North African country that benefits from being close to the UK and has a rich history and culture that offers the perfect antidote to the euro zone. With a reliable climate and increasing investment by the nation into the tourism sector, this is one emerging market that is continuing to turn heads.
One development that is proving a popular and cost-effective choice is the Palme Royale, a resort on the Red Sea coast available through Experience International that even offers the fractional ownership options that are becoming increasingly appealing in today’s market. Here, beautifully designed studio apartments can be bought for as little as £58,840, set in tropical gardens and with access to facilities that include a health spa, infinity pools and a designer shopping mall.
Tunisia
If you are looking for an even cheaper property option outside of the euro zone, Tunisia might be one up-and-coming destination to consider. The Dunes Golf & Sand Resort in El Kantaoui has a range of property options available – from studios to one, two or three bedroom apartments – starting at just £20,650 for a studio apartment. The resort is gated and at just 100 metres from a private beach, with world class Thallasso Spa facilities onsite, a 20% residents’ discount on both spa and golf facilities and a 10-12% rental yield predicted, this really is one bargain not to be missed!
Steve Worboys, Managing Director of Experience International who markets the resort, agrees,
“Now is a great time to be looking towards emerging markets for a property bargain and Tunisia is one destination that is set to see growing numbers of visitors in coming years, following on from the country’s development of the tourism sector, making this an excellent time to invest – while prices are still relatively inexpensive.”
Bulgaria
If, however, you would prefer to investigate an emerging market closer to home, the business-centred capital of Bulgaria, Sofia, is a firm choice for investment. The city is seeing a strong increase in the number of multinational companies investing and in turn therefore business tourism is also on the rise. Now is a good time to cash in on this growth, and one idea is to invest in a hotel that offers accommodation to the business-market. The Aston Hotel Sofia is one example of a project that is set to offer healthy returns on limited investment: a 6% first year yield for investors is guaranteed, although Aston Lloyd, the company behind the project, claims that this is a “conservative” estimate and are expecting the yield to be upward of 11% based on strong research on occupancy rates. And with very low entry rates of €10,000 for en-suite bedrooms and €14,000 for suites, this is an attractive opportunity.
Joseph Upchurch, MD of Aston Lloyd, comments,
“Bulgaria, and Sofia in particular, is an attractive choice when looking to buy abroad as this is a region that is thriving and has to a large extent ‘bucked’ the recession. The Aston Hotel Sofia provides investors with a unique opportunity to buy into a different kind of buy-to-let project, where they can benefit from increases in the numbers of tourists visiting the city. Not only this but those who are eligible can also include the development in their SIPP, which could see some investors getting up to 40% of their money back.”
It may seem, therefore, on first glance that this is a poor time for property – with much talk of doom and gloom and negative equity – but you only have to look slightly further afield to find that this could well be an excellent time to invest in property outside of the UK. Times may be tough for many but if you can afford to buy without the tie of credit, there are incredible bargains to be had – and you may well prosper.
For more information on investing in and around Lorca in Spain, contact Casas de Lorca on 0844 734 8057 or visit www.casasdelorca.net.
For more information on the Caracola Beach and Spa Resort, contact Emerging Earth on 0845 604 1208 or visit www.EmergingEarth.com.
For more information on investing in Egypt and Tunisia, amongst other emerging destinations, contact Experience International on +44 (0)207 321 5858or visit www.experience-international.com for further information.
For more information on The Aston Hotel Sofia, call Aston Lloyd on 0845 260 0646 or visit www.astonlloyd.co.uk.