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Follow your heart - 4 January 2007

Early indications for 2007 are that more people will be buying property abroad for the simple reason that they like where it is. This sounds like the most obvious thing to say, but in the past few years, the overseas property market has been caught up in the whirlwind of investing in property for profit. This year, it seems, will see a return to the reasons why people first started buying homes in the sun.

New data from a variety of sources is backing this idea up, and it will be nice to see property for sale and being bought for the simple idea that buyers want to improve their lifestyle, or to have their holidays in a place that they love every year.

Firstly, NatWest experts have predicted that investing in overseas properties could offer strong gains in 2007, with France and Spain leading the way, in keeping with traditional trends. The attraction for private investors is that property overseas offers the lucrative returns along with the security of a home for personal use in the future.

Mike Freer of NatWest explains: “While the upfront purchase cost is a huge financial commitment, the long-term benefits of holiday homes can be fantastic as they provide great investment potential.”

Meanwhile, property experts Assetz have predicted that France will lead the overseas property market, as interest in emerging markets cools in 2007 as buyers look for more stable investments with lower risks. The other market predicted by Assetz to grow in 2007 is Cyprus, following a tough last six months. As the country prepares to adopt the Euro in 2008, growth of 10 per cent is forecast, with up to 8 per cent rises in France.

Spain, Turkey and Poland are also earmarked to fare well in 2007, according to Stuart Law, managing director of Assetz, with Germany seen as ‘one to watch’.

Spain is seen as a buyer’s market for 2007, with the heady days of astronomical growth of the past few years gone, and the market maturing rapidly. Mark Stucklin of Spanish Property Insight sees the best opportunities in “the best quality property and developments in Spain, which I think will benefit from a flight to quality as the market dips.”

This uncertainty is reflected in figures from market watchers Kyero.com, which show that while prices in Lanzarote increased by up to 10% in the past month, the average price of a property in Gran Canaria dropped.

There are a number of theories as to how the market will progress through the next few years in Spain. Some suggest a crash is on the way, while others believe that the current decline in growth in the market is a reflection of the fact that investors are no longer speculating on Spanish property and driving up prices. This in turn leads to a property markets where growth is more manageable, and people are buying properties in Spain with the intention of keeping them and using them for the future.

In any case, it is to be hoped that last week’s bomb attack at Madrid’s Barajas International Airport doesn’t keep people from travelling to Spain this year. According to travel advice issued by the Foreign and Commonwealth Office ‘the attack bears the hallmarks of ETA’, the Basque separatist organisation. The FCO advice is that travellers globally, not just to Spain, should be vigilant of the risk of indiscriminate terrorist attacks.

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