Good evening. Today I would like to cover property investment.
As you may know John Hunt the owner of Foxtons has recently sold up for a cool 370m. This is one of the many indicators that UK house prices are heading for trouble. First time buyers are struggling to get on the property ladder as prices escalate. UK debt is at double the European average, Interest rates are rising. Mark my word there are warning signs here.
The strategy that I am using this year is to free up equity from my uk property and invest into the thriving regions within Eastern Europe.
I can see my profits growing at a much fast rate with my investments tied up in these regions.
The key factor here is to avoid areas that UK buyers are flocking to currently. If this is the case it normally means you are too late. I am therefore avoiding the hot spots in the tabloids (bulgaria, spain, poland) I do however have some recommendations that go against this rule.
I am concentrating on the following 3 countries in Eastern Europe. I have been researching these for the last few months
1) Slovenia – Slovenia is the new Swiss alps. The scenery is amazing with mountains (skiing), lakes, forests and some of the most amazing views in Eastern Europe. If you visit the country you will think you are sometimes looking at a picture postcard. Currently you can pick up a one bedroom flat from around 30k, 2 bedroom 60k, weekend houses for 10k with large amounts of land and Houses start at around £80,000.There are several options. You could buy a ski lodge and hire it to skiers (Austrians , UK , Germans etc) or perhaps purchase property to rent to locals. The majority of young slovenias live with their parents and when they leave home they dont have sufficient capital to buy. Rented properties (especially flats) are therefore in demand.
You can view some properties here http://www.sloveniaestates.com
Advantages
Great economy, recent member of EU, unspoilt and relatively untouched by british investment
Disadvantages
You may need to buy outright with no mortgage loans. Up until now there havent been any mortgages available. There are however ways to borrow 50% of the cost of a property through a Slovenian or Austrian bank. Up to the minute news is that the first uk mortgage offering 70% LTV has only recently been released this year found here http://www.sloveniamortgages.eu/
2) Croatia – Although this country has been in the frame now for several years there is still plenty of room for investment. This goes against my normal rule of following the flock. In particular the Dalmatian region and Istria (hot spots). You are still able to pick up one bedroom flats from around 40k plus and 2 bedrooms start at around 60k. Once Croatia joint the EU prices will rocket and Croatia will become the new Spain. Its locality to Italy and good transport delivered via Ryan air flights to some destinations make this very attractive. Where else can you get a sea view for 50k in Europe.
Properties can be found here http://www.realestatecroatia.com/
Advantages
Tourism is high especially with German and Italian visitors and British tourists are increasing year on year. Over 1000 miles of unspoilt coastline, high yields of around 9% for holiday homes.
Disadvantages
British buyers buying in person will require permission from the Croatian government to buy. The success rate is high however the process can take up to 18months in some cases. This can be avoided however by setting up a croatian company and buying through this instead.
Croatian real estate agents are mostly unregulated so its important you identify a reputable agent. A good lawyer will be required in Croatia in order to check the numerous legal issues to ensure the sale goes through correctly.
Difficult to get a mortgage loans in the UK to finance a purchase. It is often better to release equity in your UK home to buy the property outright.
3) Montenegro – This is a recommended punt. Although expensive to reach from the UK currently you can pick up beachfront flats for around 30k. The views are amazing and apparently a lot of celebrities visit the area because of the amazing beauty of this country. The disadvantages however are the risk involved currently. There is a higher level of corruption and crime in croatia than other european countries such as croatia or slovenia. You would need to ensure you are dealing with reputable agents and have a good lawyer fluent in both languages. Speculating that several years down the line cheap airlines will fly here the prices could potentially rocket.
A map of Montenegro – http://maps.google.co.uk/maps?near=&q=montenegro&f=p&btnG=Search+Maps&rl=1
You can find properties here http://www.montenegroventure.co.uk/
Advantages
Prices are currently very attractive for beach front properties, warm location, tourism increasing
Disadvantages
Lack of cheap airlines into the country (this could change) , Corruption and crime
Difficult to get a uk based mortgage
You will need to find a lawyer who can speak fluent english and guide you through every stage of the purchase process
Expensive to get to currently by plane if you fly direct
Conclusion
The path to success is to invest your funds in a high growth vehicle. I believe Eastern Europe (in particular the above) will give a good return on investment. In fact I myself will be flying to Croatia in July to make a purchase.
If you have any questions regarding Croatian property purchase why not head over to the Free Croatian Property Forum here.
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