The Changing Face of Overseas Property Investments
Only a few years ago, buying overseas real estate was a must for anyone with long-term investment plans. Recent times however, have seen marked changes in international property markets, especially in the USA and Britain.
In addition, incidents such as land-grabbing scandals in Spain, shoddy construction techniques in Portugal and even the widespread involvement of organised crime syndicates in Bulgaria have done much to damage investors’ confidence in foreign property markets.
Are high-yield overseas real estate investments a thing of the past?
To say that it is no longer possible to achieve high returns on properties in foreign countries would be a fallacy. However, as former ‘hotspots’ are becoming saturated and investors’ perceptions are changing, it is not longer sufficient to simply buy a home in an established location, wait for prices to rise and reap the benefits within a few years.
One perfect example of this is Spain, where formerly popular seaside resorts such as Torrevieja and Almeria are gradually being turned into concrete jungles on the Mediterranean shores by unchecked overdevelopment. The result is a steady decline in appreciation, as the market has reached and in many cases even exceeded its saturation point.
Furthermore, as an increasing number of owners in these resorts decide to sell their homes because “”This place just isn’t what it used to be.”", the excess of available new-build properties makes it hard for them to actually find buyers for their existing real estate.
“What good is a profit on paper if you are not able to realise it at a given point?”
By the same token, an ever growing number of prospective investors began to cast their eyes eastwards to the relatively untested markets of Bulgaria and Romania a few years ago, drawn by these countries’ imminent European Union memberships (accession was achieved on January 1st 2007); something which had previously prompted dramatic real estate price rises in other new EU member states.
Whilst it is certainly true that property prices have indeed risen in both of these countries since their accession to EU membership, their property markets have been plagued by obstructive laws, widespread allegations of official corruption and even organised crime involvement.
With property values failing to reach their predicted levels and numerous occurrences of ‘Phantom Developments’ – Off-Plan properties which were never constructed and did not have planning permission – being sold to the effect of investors losing their deposits, Bulgaria has developed something of a reputation as an investor’s bane during the past couple of years.
“”What good are low property values if they do not rise sufficiently and the home you buy is not even constructed in some cases?”"
The answer then, is to find an overseas property market which is not only risk-free, but also offers an attractive ROI.
Although investments of this ilk are becoming rarer to find, they do still exist.
For instance, one such market can be found in the Republic of Cyprus, a European Union member state since May 1st 2004. Not only are foreign investor’s rights protected by a set of laws which put most North-European countries to shame, the Republic is also predicted by most investment analysts to rank within the top performers where price appreciation is concerned.
Of course, some areas are likely to perform better than others, so prospective buyers would be well advised to consult an expert agency before deciding which part of Cyprus to invest in. At the time of writing, there can be no doubt that properties in Larnaca represent one of the best investment propositions on the island, due to a number of factors which include the construction of a new golf resort and marina, the expansion of the town’s international airport and the redevelopment of the Dekhelia road tourist zone.
Having said this, there are of course plenty of other prime investment properties in Cyprus, if one knows where to look.