If you are considering buying a property Overseas as an investment, now
is the time to make your move! Local interest rates are low and property
prices are rising steadily. At a time when the main airports are
predicting a sharp increase in traffic over the next few years, many people
believe that the current rate of development will not be able to keep pace
with the increased demand for private and holiday accommodation. The result?
House prices are set to rise still further so it’s a great time to
invest.
Facts and figures for property
investors
It’s impossible to predict exactly what return you’ll get from
your investment but recent reports from various sources agree that it will
be high. For example:
Property News reports that house prices on the Costa
del Sol rose by more than 18.5% in 2002.
Agence France-Presse has recently reported that property prices in Madrid
rose by more than 30% in the last year alone.
Research by Spain's National Statistics Institute predicts that Spain’s
immigrant population will rise to as much as 5.5 million by 2010, representing
in the region of 12% of its population, compared to just 5% in 2001. The
rising demand for property will continue to fuel the growth of the property
market.
Spain's ministry of development has gone on record as saying that the
average increase in Spanish house prices was 17.5 percent in the second
quarter of 2003 compared to the same period in 2002.
What to invest in
Before you decide on what you want to buy, take the time to do some research.
Clearly, if you’re planning on earning an immediate income from your
investment you should look for an existing property (commonly referred to
as a resale property) in an area frequented by holidaymakers. Take a look
at the rental market, get a feel for how much you can rent your villa or
apartment for. Don’t forget to factor in other costs such as maintenance
and management charges (someone will have to look after the property in
your absence) and remember that property with pools that are close to the
beach will yield higher rental incomes.
Buying a run down place for renovation has the advantage that you can improve
the property in ways that will specifically attract holidaymakers. It’s
a good way of adding value to your property, but be aware that getting building
work done locally can take longer than you would prefer.
Off-plan investments and buy-to-sell properties
Another popular option is to buy off-plan. This is where a developer decides
to build a number of properties on a large plot and needs to sell them before
they have been built to fund the development. The advantage here is that
you can secure the property by paying a deposit and then a percentage (usually
around 30%) of the purchase price.
Benefits at a glance
Properties that are sold off-plan are usually very competitively priced
because the developer will want to maximise the amount of cash he has to
fund the development. In other words, the more cash the developer has, the
less he has to borrow and if he borrows less then he pays less interest
to his bank.
You can choose a prime location within the development and you can often
specify the furnishings and décor of the property, all of which helps
you to get a better return on your investment.
As the development progresses and the properties get nearer completion
their values rise because there is less urgency to sell them and prospective
buyers can get a clearer idea of what the final product looks like.
If you sell your property before completion you won’t have to pay
any capital gains tax.
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Exchange Rate
1.517 €/£. Last updated at 16:29 on the 24 January 2007
