IIp21-22_property.qxd 23/3/09 17:01 Page 3
International finance | 21
Investing
Abroad
The overseas property market can still
produce satisfactory returns
by Robin Wilson,
Head of Overseas, Rightmove Overseas
tson...
os
etr
P
©
I
n this article I want to lay out a view of interest and influx of money, particularly in ‘safe’ longer have those fat equity cushions in their
the overseas property market in the cur- regions for Brits like Spain and Portugal where properties, even if the surveyors and banks
rent climate and offer some strategies for the glut of easy credit and equity in highly priced would support remortgage values. The steep
sensible investing overseas. If you are the UK homes made it easy to fund a purchase price curves previously seen have flattened along
kind of person who goes by what they abroad. with demand and in some over-developed mar-
read in the mass media, you could be for- In the boom years buying overseas almost kets values are simply in freefall.
given for thinking the sky is falling and became a retail financial product where for £10k So where does that leave investors who do
the world is ending for investors. The fact you are or £20k you could pick up an apartment and have money to spend?
reading Investment International in the first then double your money when the prices rose, Much like the collapse in the UK Buy-to-Let
place gives hope that you are not easily swayed by selling before a brick was laid. It also stoked an market (particularly in inner city apartments) a
the mass media, have had your financial ducks in ‘Aero’ economy; lots of little market bubbles for lot of the casual overseas investors are now out
order for some time and, dare I say it, are not particular regions stoked by stories of huge of the game. This is A Good Thing because
that exposed to the Crunch? returns. A lot of hot air was devoted to where those that are left are smart enough to see over-
Whilst it is true that at the extremes of the the next hot spot would be and even now most seas property transactions as long term invest-
financial spectrum there are people facing diffi- ‘news’ about the industry is someone trying to ments or relish the opportunities that a
cult times, you may be in the enviable position of stoke their local market’s fire with a tenuous distressed market brings. A recent survey of
being relatively financially secure, with reason- factoid to support why that particular area is Rightmove Overseas users showed that invest-
able assets. 12 months ago, investing in equities going to be hot. Because the price of entry to ment as a primary reason for purchase was
or even simple savings accounts would have the market was low (and corresponding cost down to 20% of users. For most, long term
delivered reasonable returns but the decimation of risk therefore acceptable), deep research ownership as retirement or a second home in
in interest rates in the UK and corresponding wasn’t always necessary or even valued by the sun was the primary driver for a purchase
falls in share prices mean looking beyond main- purchasers. overseas.
stream investments becomes attractive. Enter The bald (and slightly boring) facts are that if Search volumes on Rightmove Overseas have
stage left, overseas property. you are chasing two or even three figure percent- remained relatively static throughout the down
The classic overseas property investment oper- age returns, you’ll be flying way out on a limb, turn and the New Year actually saw a rise in the
ates on the price rise principle: invest early and because there’s just not enough transaction vol- number of enquiries through the site. For the
buy off-plan, then surf the price rises that corre- umes to support a bubble economy at the 80,000+ visitors we see a month, the dream of a
spond to stages in the build process; planning moment in property. The bulk of the retail level home abroad is still very real but, this shift away
permission being granted, first foundations laid, investors who drove the market on the back of from a short term outlook towards long term
first apartments finished, second phase started, low entry costs and minimal research are sitting holdings and value driven investing means ven-
construction complete, facilities, infrastructure on their hands and can’t or won’t spend. They’re dors and purchasers need to adopt different
and dressing. This model has certainly seen huge worried about the situation at home and no approaches.
www.investmentinternational.com March 2009 Investment International
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36