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How to find the next big thing - 4 June 2007

Buying property overseas has changed. It used to be that either a cottage in rural France, a coastal property in Spain or an old farmhouse in Italy were the dreamed-of and abundantly-available overseas property staples. Now, while these destinations remain popular, the fact that there are less of these properties available and they are far more expensive than they previously were, buyers are constantly looking further afield for their overseas property investment.

The increase in the number of airlines, and the exponential growth in routes from the UK has been a major factor in this, as has a certain lack of confidence in the stock market and pension funds in recent years. Increasingly, investors are venturing into what was the preserve of the holiday home buyer, but the challenge for these investors is to find that next big growth market, and get in ahead of the rush.

You could do much worse than to study the internet for news of the latest new routes to be opened up by low-cost airlines for a clue as to where you could make money from a foreign buy-to-let. These no-frills carriers have fundamentally changed the way we book our holidays now, with many people choosing to look at flight fares when deciding on their destination.

Working backwards, low-cost airlines will have seen a potential market and negotiated reduced airport handling charges in order to run these routes and keep fares low. In turn, holidaymakers and people on weekend breaks often head for the lowest-priced destinations. Combined with the demise of the traditional package holiday, and the increase in people choosing independent, self-catering accommodation, a new destination for a low-cost airline could be a good option for the amateur investor.

Like all forecasting, you must never expect 100 per cent accuracy and factors like regime change, over-generous subsidies and changes to the tax laws can give a false picture. No-one could have predicted when Cape Verde would be ready for the development of residential tourism without some in-depth understanding of the country.

This method is unlikely to produce the fantastically high returns demanded by some more ardent investors, and may not get you in ‘ahead of the curve’, but could give you a good starting point for further research.

 

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