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10 tips for investing in emerging property markets

Overseas property can bring high capital returns, but the key is being able to identify the next property hotspot and ensure that returns are maximised. 

To that end, here are 10 tips on how to successfully identify an emerging market

1. Research, research, research

Do not judge a place on face value.  It is essential that buyers conduct full and thorough research into the markets they are planning on buying; how far it is from the airport?  How close are the local shops, restaurants, the beach and hospitals?

2. Consult the experts

Purchasing in an emerging market can mean that there is a lack of information available regarding investing in the country.  As such, it is essential that buyers consult those who specialise in investing in the region.       

3. Planned EU membership

EU membership brings inward investment and the easing of restrictions on the movement of capital and trade.  Many new EU states, such as Poland, have seen property prices soar following their joining.  

4. Leisure facilities

Large scale facilities such as ski runs, golf courses, hotels, spas and diving centres, increase the demand for holiday homes and boosts property values.  These facilities will also attract tourism, and as such rental yields will increase.   

5. Government and private investment

Investment encourages improvements in the local infrastructure and amenities, bringing money into the area, strengthening the economy and pushing house prices upwards.

6. Up and coming events

Major events on the sporting calendar such as the Olympic Games or golf tournaments encourage development and regeneration and attract tourists to the area, boosting house prices.

7. The law

Keep abreast of legal issues surrounding foreigners' access to the housing market, as well as any changes to purchasing restrictions for foreign investors, this is particularly important in emerging markets, as the situation can change quickly.

8. Tax

Check the inheritance and capital gains taxes in the country you are purchasing in.  It is extremely unlikely that taxation laws will be the same as in the UK. In some areas, such as North Cyprus, you may be exempt from inheritance tax, however, in others, buyers may have to pay tax on pensions, or even tax in both the UK and the country of purchase.  

9. Arranging finance                                                                                             

In some emerging markets you may not be able to get a mortgage in the country of purchase and will have to get one in the UK.  However, if your mortgage is in the local currency then you must consider the impact of fluctuations in exchange rates.

10. Read the contract

If you are given a contract in a foreign language then ask for a copy in English. Ensure that you read it carefully and are clear on everything, especially the deposit, completion date, what's included in the property price and whether there are any additional charges.

Dermot O'Kane, Director of Property International, offered the following guidance for emerging market hunters: "Identifying and investing in emerging markets requires a lot of market knowledge, particularly as in these ‘hotspots' property prices are governed more by the local buyer than by the overseas one. 

"Never assume anything.  The key to success in an emerging market is research; look into everything, from finance and taxation to local restaurants and flights.

"When armed with a full knowledge of the area, and you have established what type of property you are after, it is essential to act fast to keep ahead of the game and really capitalise on the country's status as an emerging hotspot."  

To find exciting properties in emerging markets, visit our investment property portal: http://investment-property.themovechannel.com/