British buyers have been too busy in their domestic property market in the past but now are setting their sights on other countries, especially in Europe, Vanya Damyanova reports
The credit crunch dealt a strong blow to European economies and most of them have spent the last seven years repairing the damage. Being at the forefront of the recovery the UK has seen its currency strengthen considerably against the euro this year. This has presented a favourable investment opportunity to UK buyers and many are taking advantage of it.
In its summer report, FXCompared, an independent comparison website for international money transfer, says almost half (46 per cent) of Brits investing in property do so overseas. The Sterling strength is a key driver of interest in buying abroad and Europe is a particular draw because of falling property prices, the report states.
Looking ahead FXCompared predicts that currency exchange rates should continue driving British investment in international markets over the next 12 to 18 months.
While there may be wonderful opportunities out there buyers still have to know where the property hotspots are and the best European markets to invest in. With that in mind I got in touch with several specialists in international property transactions to find out what they think.
The Overseas Guides Company (overseasguidescompany.com) says in its spring report this year that Spain, France, Portugal and Italy are its top four busiest markets.
Who is buying?
Everyone agrees demand is high and the markets are busy but who are the buyers? Are Brits flocking to other European markets just to secure a nice buy-to-let return, are they looking for a second home for the holidays or for a quiet retirement nest?
Marc Pritchard of Taylor Wimpey España says: “We find that the majority of our buyers are families looking to holiday together or retired people.”
Yaman comments: “Over 250,000 people in the UK already own an international property. It is hard to pinpoint a particular group of buyers who are more active than the rest. On the other hand, it is almost certain that retired people are pre-eminent among the buyers who bought property for personal use as second home.”
Graham Davidson of Sequre Property Investment adds: “Looking at the UK, the majority of buyers are over the age of 50 and have a lump sum saved up and enough disposable income to carry this out. Their high levels of equity allow them to purchase a property relatively stress-free and the market is perfect for their personal needs, so the increase of these buyers is understandable.”
Outlook
Looking ahead, an interesting question that arises is whether British buyers are likely to return home at some point in the future.
Ray Withers, chief executive of investment specialists Property Frontiers, says: “Property markets move in cycles. What is a great time to invest in one market may not be a good time in another.
“However, if we have learnt anything from history, it is that market movements will present myriad opportunities in the future. At some point the UK market will slow, but will then quicken again; it’s all about the right place at the right time. With global coverage it is our job to spot the markets when opportunity presents itself.”
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1. Spain
Spain is the number one market for the Overseas Guides Company and is top pick for many property experts as well. The most popular Spanish regions with UK expats are the Costa del Sol and Costa Blanca, which continue to drive the Spanish market, the report said.
Marc Pritchard, sales and marketing director of Spanish homebuilder Taylor Wimpey España (www.taylorwimpeyspain.com) recommends the local market: “The Spanish coast is an excellent choice. It has all the factors that are of major importance – weather, beautiful beaches, top-class golf, nautical sports, excellent gastronomy, cultural offerings and a tourism orientated society. All this at an affordable price and the benefits of a stable economy.
“Mainland Spain and the islands are a good choice for return on investment. The market has bottomed out and prices are starting to rise. Just make sure you buy in the right location!” Pritchard advised.
Graham Davidson, managing director of Sequre Property Investment (www.sequre.co.uk) comments: “Unsurprisingly, Spain is the number one destination for UK buyers looking to purchase abroad. It allows for the perfect lifestyle investment and has so much to offer for those looking for a holiday home – sunshine, beaches and an array of family friendly attractions in the majority of its towns and cities. For investors, rental demand is rife thanks to high tourist numbers in the country.
“Popular areas of Spain, such as the Costa Blanca and Costa del Sol, have recovered extremely well from the financial crisis, with almost all aspects of their property market showing promise and rising figures. Due to significant rental demand, yields also tend to be strong in these areas too, with an average one bed seeing yields of around 7 per cent.”
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2. France
France ranks second in the Overseas Guides Company’s report and experts are highlighting the popularity of coastal properties here in particular.
The South West of France continues to be a key buying area for British people, from the Charente Maritime down to the Pyrénées Atlantiques; and across to the Lot and Tarn et Garonne, the report states.
France is a market that is always popular and doesn’t seem to move as much in response to political and economic events elsewhere, according to the Overseas Guides Company.
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3. Portugal
The Portuguese market is sitting comfortably in the number three spot, performing steadily since the beginning of 2015, the Overseas Guides Company’s report says. The 1,500 enquiries for the second quarter of this year represent a year-on-year hike of 24 per cent compared to Q2 2014.
Property experts recommend Portugal as a hotspot especially for retirees as the local government’s Non Habitual Resident scheme offers tax incentives to foreign property buyers.
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4 .Italy
Italy, the fourth most popular destination in the Overseas Guides Company’s report, was a “surprising star”, outperforming all other top five countries in terms of growth, enquiries for Italy rose 17.6 percent in Q2 compared to Q1, reaching 1,114.
Lorenzo Mercolini, managing director of Italy Sotheby’s International Realty, comments: “I would recommend Italy for a number of reasons. First of all, Italian real estate prices are at the bottom of a cycle. All analysts expect a gradual pick-up in prices starting in 2016.
“Another reason is that taxes on Italian real estate are much lower than those in comparable countries. For example, there is no capital gains tax after five years of ownership and property taxes are very low. Finally, the myth of Italian lifestyle will never really fade away, ensuring that the value of the investment will remain safe for years to come.”
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5. Turkey
Turkey has also been pointed out as one of the more popular European property markets in 2015.
Adil Yaman, director of Istanbul-based property agency Universal21 (www.universal21.com), says: “The interesting point is that overseas property bought for personal use is concentrated in Europe, whereas international property investments are more spread out geographically. Spain, Portugal and France remain the most popular countries for British people to buy an overseas property, with Italy and Turkey also still popular destinations.
“Istanbul, especially, is proving increasingly popular, with an expanding infrastructure, new ground-breaking projects under development and historic and cultural charm that is second to none. This combined with a mesmerising feeling of east meeting west, Istanbul has much to offer both the short-term visitor and the longer-term property purchaser. There is a really positive, exciting vibe of growth and evolution in the city today, drawing international attentions and increasingly so.”
Yaman continues: “Turkey is seeing impressive tourism growth, on track to outpace that of New York City this year, and this bodes very well for the property market. The latest figures released by Knight Frank’s annual Global House Price Index report, rank Turkey’s annual property price growth as the highest in Europe at 18.6 per cent, and second globally, just missing out to Hong Kong by the smallest of margins.
“Inextricably linked to Turkey’s flourishing housing market is its construction industry. The most recent research conducted by the Turkish Statistical Institute in relation to confidence in Turkey’s construction services shows an increase of 1.6 per cent compared to last year. A growing number of managers within the construction industry advised that workload was above the seasonal average and they were expecting a rise in ‘total employment’ over the next three months. With infrastructure expansion and a low entry level, it is clear to see why increasing numbers of foreign buyers are investing in this country, and particularly its largest city of Istanbul.”
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