Overseas Real Estate Investments: Better Than Those At Home?

Whether you live in the United States, the UK, continental Europe, or anywhere else - is there more money to be made from overseas property investments than those at home? David McGinty-Hodges may have the answer.

By David McGinty-Hodges

Whether you live in the United States, the UK, continental Europe, or anywhere else - is there more money to be made from overseas property investments than those at home?

The easy answer is: 'Depends ...' But what exactly does success in the overseas property market depend on?

Let's take the Mediterranean real estate market as an example for a moment. Currently, this sector of the global property market has three established hotspots (Cyprus, France, and Spain), as well as a couple of up and coming locations (Croatia and Turkey).

While Turkey and Croatia, like most untested markets, do attract a certain number of speculators with their ridiculously low property prices and crowd-free coastlines, there is a certain amount of concern amongst analysts about the rate of capital growth within these countries. Furthermore, these locations are not (as yet) members of the European Union, and as such cannot provide the long-term security for investor's capital available in E.U. member states. So, although property investment in locations such as these may seem like an attractive proposition, caution is advised before making a financial commitment.

But what about the established Mediterranean real estate hotspots?

Spain has long been the big boy in the Mediterranean property playground. Inflated home prices, numerous land-grabbing incidents, corruption scandals, and a tendency to severely overbuild any popular region have, however, served to make foreign buyers approach the Spanish property market with a certain amount of watchfulness. One only needs to take a look at the concrete jungle commonly known as Torrevieja to understand that, although it is still possible to successfully invest in Spanish real estate, there are long-term implications which may serve to harm a property's capital value if it is not 'liquidated' in time.

Unlike Spain, the south of France has a reputation for its many exclusive Mediterranean homes. Consequently, real estate prices are already somewhat on the high side and, while there is a projected growth in property values, this is predicted to be a very gradual affair over the coming twenty years, which makes France a good location for long-term investors, but a shaky proposition in the short and medium term.

What about Cyprus then? Is there anything which sets the Republic apart from other Mediterranean countries where real estate investment is concerned?

There is, of course, the fact that the Republic of Cyprus only attained full European Union membership on May 1st 2004, thus making it relatively ‘virgin territory' where investors are concerned. The regions around Paphos in the west and Paralimni in the east have been popular with holiday home buyers for many years, but more recently Larnaca and Limassol have caught the eye of prospective investors looking to take advantage of price increases in the wake of forthcoming improvements to the local infrastructure with the aid of massive European Union grants, as well as the forthcoming adoption of the Euro, set to coincide with the introduction of VAT on land on January 1, 2008.

These developments have made the investment atmosphere in the Republic of Cyprus an exceedingly attractive one in the eyes of many potential investors. Like any country, there are certain parts where price rises will be greater than in others, but with a little research and some help from an experienced and ethical property investment consultant, one stands to make more than healthy returns on one's investment during the short and medium term.

If you are considering the purchase of a home in the Mediterranean, you would do well to take a look at Cyprus during 2007, since those investors beating the January 1, 2008 deadline, stand to make even greater returns on their capital than those who wait it out.