UK Property Investors Advised to Look Abroad
January 27th, 2006
It is understandable that many people investing in property for the first time are tempted to limit their search to the UK, but experts have been highlighting the advantages of looking abroad for both residential and commercial investments.
The property market in the UK has admittedly returned to good health in recent months with buy to let investors expecting high yields and rising house prices meaning incisive investors are likely to make considerable returns on residential properties.
Investment returns on commercial property meanwhile finished the year at 2.7 per cent in December, which translates into a 12 month return of 18.8 per cent.
With this in mind, entirely abandoning the UK as a property investment location would be senseless. On the other hand, it seems many UK residents are still failing to even consider the potential benefits of investing abroad, with commercial property a good example.
In an article in the Financial Times, property correspondent Jim Pickard refers to the fact that very few Britons have even heard of the fact that Spanish property company Metrovacesa paid 5.5 billion Euros for its French counterpart Gecina in March last year and he cites this as an example of the insular and blinkered view that many UK residents have on the property market.
Mr Pickard suggests that the introduction of real estate investment trusts (REITs) next year will “internationalise the market even further” and he suggests it will put an end to the “parochial” attitude to investment that he believes is rife in the UK.
He indicates that the specialist nature of the property industry is to blame for the philosophy, arguing that the while the UK may sometimes provide the best investment options, it is important not to miss out on opportunities further afield.
“Retail park experts can tell you about the square footage of a carpet barn in Huddersfield. Industrial warehouse types can tell you the typical yield on a Hastings logistics shed off the top of their heads,” he said.
“Residential apartment experts know where prices for Liverpool penthouse flats are going, although they may choose to keep this information to themselves.
“As a result, many property types have become almost stereotypical Little Englanders, closing their eyes to goings on on far off shores.”
In terms of residential property, a survey by Barclays in November last year found that the number of UK residents owning a property abroad was set to double to around 4.4 million in the near future.
Interestingly, a staggering 37 per cent of those questioned said that they were considering buying a property abroad, although it seems that many felt they needed more information before making the decision.
Predictably, Spain was found to be the most popular country for foreign property investment, as Britons look to capitalise on rapidly rising prices and high levels of demand in areas such as Valencia, Alicante and the Murcia region. France came third in the list with houses in the Languedoc area and ski properties in the Alps continuing to prove popular.
In eighth place in the list but gaining in popularity annually, Bulgaria is also an option to investors looking for a break from the norm, led by the popularity of Black Sea locations and a flourishing ski industry in resorts such as Bansko.
Story from Assetz News
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