Emerging markets such as Slovakia and Poland could prove to be lucrative for international property investors
If you are considering making an investment in overseas property, but are undecided where to buy, a new report may prove invaluable.
Launched by global investment company Aston Lloyd, the report, called ‘The seven property hotspots,' identifies the top seven places and cities in the world where you are most likely to make a profit.
It is based on in-depth studies from central banks and ministries, which look at rental potential and at the possibility of increasing, or even losing, your initial investment.
Where to invest – at a glance
Slovakia: key emerging market in the European Union, the country's property prices have risen by 100% since 2004. Its capital Bratislava has 129% of the EU average GDP.
Central Bratislava would be a good investment as yields here are high. Gross yields on 100 sq m and 120 sq m apartments are around 10.1%.
Watch out for: Minor land issues caused by unsolved heritage disputes prior to 1989 may require a prolonged acquisition procedure.
China: Home to 21% of the world's population and forecast to be larger than the American economy by 2045, China is already the world's second largest economy based on Purchasing Power Parity.
Shanghai could be a solid investment with an increasing demand for high-end property. Beijing has had an influx of foreign workers for the Olympics that will further raise housing prices. Huge investment into city's infrastructure is expected to sustain price growth.
Watch out for: Consult with solicitors on precise property rights as given the communist Government's policies, certain property rights are not guaranteed.
Concerns about sustainability of the boom mean that investors should mitigate risk by buying in the central business districts rather than Olympic focused destinations.
Northern Cyprus: Plans for reunification with the Republic of Cyprus, combined with average annual economic growth of 12.7% since 2003 and annual capital appreciation of 25% over the past 2 years, has put Northern Cyprus on the map.
Investors should look to Bogaz – the coastal fishing village is the hot spot for investment. It is popular for its beaches, sought after restaurants and its strategic location near Famagusta.
Watch out for: With the division of the island in 1974 and the forced removal of residents in certain areas, some claims to property may exist if the island division is settled and displaced northern Cypriots return from the South.
Buy through a reputable investment company who guarantee no such claims exist on the property you are purchasing.
Ukraine: The second largest economy amongst the former Soviet States, the Ukraine has a predicted sustained GDP growth of 5% per annum through to 2010.
Ukrainian property in some areas is now priced higher than Warsaw and Amsterdam. Great potential for property investors for some time to come.
Look at Kiev for investment potential, as it has a growing expatriate community, and an increasing demand created for high standard builds in the capital. Prices have been driven up by demand. Supply to meet demand has not been sufficient, indicating that there is still room for investment.
Watch out for: Levels of corruption are high so a competent solicitor is essential. Taxes are also moderate to high. Gross rental income stands at 15% while leasing a property is subject to 20% VAT.
Bulgaria: a full member of the EU and tipped to receive over £8.8 billion in EU development funding to 2013.
The capital city of Sofia may make a good investment. Home to the majority of Bulgaria's 200, 000 millionaires, prices rose here by 35.21% in 2007, thus making it a strong property investment.
Alternatively, Varna is the summer capital of Bulgaria. Recent huge investment in villas, apartments, shops and marinas. A lucrative area to invest, particularly in the holiday sector.
Watch out for: Closing costs are high (VAT, municipal tax, notary fees, registration fees and agent commission are paid by the buyer). Costs incurred by the buyer can therefore be up to 25%. There is also rental income tax so investors should make sure their investment returns profitable yields.
Phil Grimes of Select Property Overseas, said, "Bulgaria has started slowly in its EU journey as a full member.
"Although large amounts of EU funding will be made available over the next five years, the country needs to be able to demonstrate the progress it is making.
"Property is still a boom area with many locals now able to buy their own houses for the first time thanks to mortgages now being readily available.
"For the international investor, high capital gains are being replaced by more moderate gains and stronger rental incomes as the market matures.
"The capital of Sofia is a strong long term investment as the country's wealth increases.
"When purchasing I would advise getting a full breakdown of all of the costs associated with purchase before committing, check that VAT at 20% is included in the advertised price, that the total notary, stamp duty and other registration fees will be no higher than 3.5% and that any commissions are borne by the seller.
"On the 1st January 2008, a flat rate of 10% tax was introduced on all personal income, which reduces the previous tax burden on rental incomes and increases the net yield on investment.
"Rental yields are still strong in the main tourist resorts and in Sofia," Mr Grimes added.
Turkey: Average annual growth rate of 7.3% since 2004, Turkey has established itself as a leading emerging market for property investors. A burgeoning tourist industry and planned reforms ahead of its EU accession, mean Turkey is poised to become one of the world's top 10 economies by 2050.
Consider buying in Belek, Turkey's golfing mecca which has plans to add up to 15 golf courses to its range of five-star golf retreats over the coming years, Belek is bathed in sunshine for 320 days a year, and property investment here has increased by 40% since 2005.
Bodrum, the yachting and tourism hub of the country, has seen property prices rising by 30% over the past two years.
Altinkum is cheaper than Bodrum yet 90 minutes drive by car from the prime investment resort town, offering varied opportunities for on-sell and lettings.
Watch out for: check the planning so you don't have ugly builds near your investment; ensure that property for sale is accompanied by title deeds and make sure you get a competent solicitor to explain the terms before making the decision to purchase.
Poland: Poised to become the manufacturing hub of Europe, it has experienced economic growth of 6.3% since 2006 with a low inflation rate of 2.5% in 2007.
The country's housing market is significantly larger than other European emerging markets and mortgages are easier to obtain.
Where to buy: Warsaw, high housing demand and profitable long-stay rental properties.
Krakow, well suited for rental investor with a housing supply that does not meet the demands of its high earning population.
The Tri-City – three adjacent towns of Gdansk, Gdynia and Sopot lie on the coast of the Gdansk Bay of the Baltic Sea and attract considerable inward investment from companies looking to recruit due to its wealth of educated professionals.
Sopot ranks as Poland's ‘best places to live' by Polityka magazine.
Watch out for: Growth in Warsaw potentially unsustainable; increased due diligence on behalf of investors as some vendors offering inflated prices taking advantage of the boom in foreign speculative buying.
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