Published on : Thu, 14 Jul 2005 00:00GMT
by : Sadat Sayeed

Investors looking to park their money overseas need to look at property firm Assetz’s recommendations. Their recently concluded survey of property markets has revealed that France, followed by the Cypriot market offer the best returns.

The comprehensive survey considered criteria such as minimum investment required, mortgage costs, rental yields and capital appreciation. An analysis of the criteria revealed that France topped the list in total return on investments at a very attractive 92 percent.

France’s property market outperformed every other property market such as Bulgaria, Cyprus, the UK, Spain and even Florida, the survey found. It paid the best returns on buy-to-let investments.

Returns from Cyprus’ property market, though it did not come close to France, was still excellent at 72 percent.

Stuart law, the firm’s managing director explained that the findings were based on several criteria that any prudent investor would consider before investing his money. ‘Word-of-mouth’ was the least reliable source for clues to decide where to invest. He gave the example of Florida, which is a clear risk for the investor, despite many US property intermediaries recommending it.

He echoed the survey’s findings that designate the US currently as a ‘no-go’ zone for buy-to-let investors. People who are still hopeful of decent returns must remember that the boom (in the US property market) was largely the result of extremely low interest rates. In order to slow down the market, the government has now reversed its measures and is raising interest rates. Investors should keep their ears to the ground as many respectable analysts have forecast a period of instability which may be imminent.

For investors who have a long-term strategy the risk in Florida is lower.

The firm’s report also cautions investors who are keen on Bulgaria, the current darling of property investors. It points out some areas where house prices have grown significantly, such as the Black Sea coastline and major ski resorts. Properties marketed as ‘bargain deals’ (at under €30,000) should be regarded with some skepticism, the report warns. Such deals are usually located in inaccessible rural areas where the property prices may show poor growth. One cannot expect good rental yields from such places. Additionally, one should factor in the minimum deposit of 30 percent to estimate returns from an investment in Bulgaria.

Without a doubt, France offers the best returns because the minimum deposit is just 15 percent. Annual capital appreciation is now 15 percent while rental yields have plateaued at 7 percent.

Second choice should be Southern Cyprus offering annual capital appreciation of 18 percent while rental yields remain steady at 8 percent.

In the UK, buy-to-let investment currently makes sense only if you plan to let out the properties to students – a fast increasing tribe in the nation. Buy-to-let properties in university towns enjoy a high rental yield of 8 percent.

If the Bank of England’s Monetary Policy Committee decides on the much anticipated cut in interest rates, property investment in the UK could provide decent returns in the near future.