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Property Investment. Risk Versus Reward, Where And Why?
By James Wilkinson
Investment in property is where the old cliché safe as houses came from, and for many years, property was seen as a boring and slow prospect for making money, most peoples experience was limited to the family home, and that was that.Then things changed, we saw several investment fundamentals change, the price of gold fell through the floor, stock markets in Asia had a severe reality check with a certain British private bank, one of the biggest bare faced bank scams of all time, the internet came along, bringing IPO’s and techstocks and along with it, one of the largest major market corrections of our time. So where did all that go? Surely it didn’t fall off the face of the earth?, Well, some did, the paper profit that was there fell away with the fall in markets, many couldn’t or wouldn’t see the end was nigh, but for those that did, it begs the question, what did they do?
Some new ways for the bank to hoard your at pittance return, cd´s, limited tracker bonds and so on popped up, which were all well and good, but often limiting as to the size of investment possible. The big money, where did that go? Property. These days, you can’t avoid it, its in the press, on the TV, and you can’t move on the internet without being badgered with overseas real estate this and property abroad that. Even if you see the light and agree that it is the way forward to make in a reasonably secure and comfortable fashion, alongside other investment tools, the next immediate question is usually where? quickly followed by What can I get for my money? and what’s the risk?Well, here is breakdown on some of the most popular regions:- SPAIN; Produces a variable in its own right, broken down into three areas, Costa del Sol; A hotbed for European investors for over 30 years. Whilst capital gain is not what it was, this is fast becoming a high rental return market when managed well. Property on the Costa del Sol is bought for investment on the longer term or personal use. Few guaranteed rental schemes exists, hence not widely used by institutions, however, often used by private companies for "asset accumulation" Costa Blanca; A well known holiday hotspot, made famous with Benidorm in the 70´s. New developments in more rural areas offering fantastic value for money, with very reasonable appreciation and a constantly improving rental market. Often invested into because the Costa del Sol is thought to have reached its peak from a capital appreciation point of view, and also because it is less dense and requires less outlay. Costa Calida/Almeria/Murcia; These areas were seen until recently as undiscovered although well served with airports, they were not well promoted by the travel industry until recently. Consequently, new developments of all taste, size, and location available, as well as a thriving re-sale market, Not all that well established yet for rental return, but with the budget airlines jostling for position in the travel market, this will improve steadily. Arguably the most suitable area for those looking for low risk, best return with a low to average outlay. Bulgaria; Two main regions here, Sunny Beach; One of the first areas outside mainstream Europe to be on the tip of everybody’s tongue for investment. New developments and off-plan are really the only thing to look at here. The prime reason for this, although we are well aware that existing property and land can be bought there for pennies, the legal implications for foreigners are horrific, invariably so much so that it does deter many from pursuing to the point of purchase. Sunny Beach is on the Black Sea coastline, it is possible to buy in the busiest of areas, or, in very tranquil
secluded areas, both have there attraction to the tourism industry. Limited guaranteed rental schemes are available, suitable for those with limited budget, looking for high capital gain initially and steady rental return for the future. Bansko; Possibly the most sought after region for real estate investment to date. Skiing, Golf, Equestrian, Lakes, Spas and potential hosts of the Winter Olympics in 2014, all being attached to this area with limited space upon which to build. Once its gone, its gone! Rental returns set to be extensive with the ability to have two holiday seasons. Very limited guaranteed rental schemes available, rarely worth taking when they are. Larger outlay required than Sunny Beach, although the supply and demand will continuously maintain high prices, if placed with a well connected rentals company, sizeable percentage returns will be possible. Southern Portugal; The Algarve, from Tavira to Lagos. A lot like the Costa del Sol the appearance, lifestyle and longevity are similar, without the density. This presently results in lower entrance prices and a few guaranteed rental schemes. Suitability from an investment point of view is similar to Costa Blanca. Cyprus; Although often thought of for investment, the turnover of property is relatively low. The reason being whilst many properties are sold there, the vast majority are for relocation, retirement, and all year round holiday use. This is quite possibly because it has a UK based legal system, outstanding natural beauty, and consistent climate. For investment purposes, high rental demand, but long term appreciation. Florida; Boasting the largest tourist attraction in the world and more visitors than anywhere else. Convention bookings are the highest in the world, price per square metre versus quality is exceptional, all of which equal an ideal balance between holiday home and investment, particularly with the rental agreements available. Suitable for both medium and long term investment. Bahamas; The benefits are numerous for investing here. Instant offshore status, tax free, idyllic settings, and popular for tourism. However, prices are already at the higher end, most investors are usually there for the benefits that the domicile offers, or the lifestyle, rather than the capital gain or rental return. Dominican Republic; Although known for being an all-inclusive resort, recently mortgages have become more available for foreigners on more attractive rates and terms, making this considerably more favourable than other Caribbean destinations. Far more accessible than ever before, rental potential is one of the highest to date. Low entrance level, short to medium term. Cape Verde; The new Bahamas? could be! Still reasonably tax free, works on the Portuguese legal system. Limited by size and construction restrictions. Set to have extensive capital gain in time to come, with rental yield to follow. Mid to long term, low outlay. Morocco; The Mediterranean coast is being constructed in an image similar to the Costa del Sol, just at a fraction of the price, the countries connections with the UAE will undoubtedly bring like minded investors to the region as were found in the early days in spain. Still at the beginning of development, long term investment is the key. Turkey; Having had a few teething problems in recent times, now about to enter the EU, having stabilised its currency. Property is relatively inexpensive although mortgages are not yet available, so you do need to be a cash buyer. Climate is similar to Cyprus, and guaranteed rental is available. short, medium or long term. <A href="http://www.prismaticgroup.com/">Link text</A> Copyright March 2006, All rights reserved.
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