23 February 2006

Cyprus property boom

Property investment in Cyprus is becoming increasingly appealing to investors worldwide, with economic conditions now improving at an impressive rate and the prospective adoption of the Euro drawing record interest from foreign investors.

Jeroen Kremers, an executive director at the International Monetary Fund (IMF), recently predicted that Cyprus would be using the European single currency by April 2008 and he stressed that it would be a crucial move for the health of the country's economy.

Property prices within the country are currently rising at a staggering rate of up 20 per cent annually. As such, investors are finding they can make bigger gains on their property in Cyprus than in France or Spain, while growth rates in Bulgaria can still be unpredictable.

Cyprus has long been a favourite among UK tourists and investors and it also has an enviable reputation for attracting "repeat visitors". A growing number of UK residents are looking to the island for a holiday home, many more decide to retire there and thousands are taking advantage of good investment conditions.

This special affinity is down to the fact that the basic infrastructure in Cyprus is not dissimilar to that of the UK.

While investing in some countries can be daunting because of basic communication difficulties, English is spoken by a significant proportion of the population in Cyprus, while the land registry system differs only marginally from that within the UK. All of this is crucial in making the task of buying and selling a property or making a buy-to-let investment all the more comfortable.

22 February 2006

South Korea offshore property investment

The government may remove all restrictions on overseas property purchases by next year after moving up its schedule to liberalize foreign currency transactions, officials at the Finance Ministry said yesterday.

At the moment, Koreans are banned from purchasing commercial-use property outside the country. Those purchasing property for residential purposes are subject to a ceiling.

But after raising the limit last month, the government is poised to lift all restrictions by the end of this year.

If the ministry gives the green light on eliminating the restrictions on commercial real estate purchases as well, there would no longer be any restraints on Koreans seeking to buy property abroad.

"We can't confirm it yet, but we already said earlier that the restrictions on offshore investment would be eased by 2007 or sometime soon after that," said Hwang Gun-il of the ministry's international finance department.

Easing the rules on offshore property investment is the second phase of the government's plans to fully liberalize all foreign currency transactions by 2011.

Finance Ministry officials are currently planning to accelerate this schedule amid steady gains by the local currency.

So far this year, the Korean won has appreciated around 4 percent against the U.S. dollar. That surpasses the 2.4 percent increase seen in 2005.

By lifting currency regulations, Seoul hopes to slash the won value.

16 February 2006

Ryanair move into holiday property market

Visitors to Ryanair's website can now click on a link that displays thousands of properties in Spain and Portugal.

The no-frills airline has inked a deal with property firm Majestic Worldwide that will see it place links to its partner's website on Ryanair.com.

Ryanair already has its fingers in several pies outside the air travel industry, recently launching its own range of travel insurance products.

But the budget airline apparently felt the time was right to build closer ties to the property sector as second homes in Iberia become increasingly popular among Brits.

Under the terms of the partnership, the first 50 Ryanair customers to invest in Majestic's La Condesa de Mijas Golf property in the Costa Del Sol won't have to foot the bill for the first 18 months of mortgage repayments.

This should see those quick off the mark save around €20,000 (£13,700) on their properties.

Majestic offers a wide variety of properties ranging from studio apartments to luxury villas.

According to the Irish Examiner, Ryanair says its new property venture could be extended to Italy and France, depending on how the initial deal pans out.

14 February 2006

Ski resorts in Bulgaria

There has been a 40 per cent increase in enquiries for investment property abroad in Bulgarian ski resorts since September 2005, as overseas property investors seek to capitalise while prices remain low. Exclusive resorts such as Aspen Golf in Bansko offer affordable Ski property and strong long-term investment potential, according to investment property experts. An off-plan studio or one-bedroom apartment start from €50,000 ( £35,000 ).

Over 30 per cent more UK holidaymakers visited Bulgaria in 2005, leading to an influx of travel companies with a majority of them offering guaranteed rental schemes. With a number of no thrills airlines looking to open up more direct routes to Bulgaria, this can only add to the long term growth of property investment.

Rental yields through guaranteed schemes are about nine per cent, while property investors letting independently are achieving yields of about 12 per cent.

However there are risks involved with buying Bulgarian property. Although Bulgaria is quickly establishing itself as a more mainstream destination it still remains an emerging market. The resale market is not as well established as other countries due to Bulgaria's status as an emerging economy and the large number of new developments being continuously released.

Overseas property investors have to decide whether they are prepared to take the risks associated with a new destination in an immature market such as Bulgaria, or a more established low-risk destination such as Spain which is more expensive to invest in, therefore offering lower returns short term .

With Bulgaria's membership to the EU looking imminent, it appears that many investors believe it’s a risk definitely worth taking.

A typical 2 bed Spanish investment property in Almerimar - Costa Almeria – Spain will cost aprox 105,000 euros compared to 50,000 euros for an apartment on the Ski slopes of Bansko in Bulgaria.

Removals, storage and shipping

Moving furniture and shipping your valuables to a property overseas can be not only a time-consuming but also painful procedure.

Make sure that you trust the job to a specialist because moving should not add to the burden of buying and all the paperwork that is involved.

Of course there are many companies out there that offer removal and shipping services in the EU and internationally but RemovalGroup caught my eye.

They offer the services of a dedicated removal co-ordinator who is on hand at any time of the move process. No need for endless hours on the phone trying to find out where your things are plus a long list of useful associated services from cleaning to handyman jobs and most importantly the peace of mind that your things are going to get to their destination in one piece.


13 February 2006

New property investment TV show in Australia

Property Climbers is a real estate series about ordinary Kiwis trying to climb a rung on the property ladder, hoping to make some money.

The producers have tracked the ups and downs of different individuals over six months, as they practise their secrets of property investment.

What do they reckon they know that ordinary people don't about which house or block of land to buy? How do they spot the investment goldmines from the dogs?

Every step of the way millionaire investor and property consultant, Olly Newland is there with advice and tips for viewers.

"Over the years I've done up heaps and heaps of properties", says Olly. "I've done them quickly and cheaply, and I can tell you this, it's the quickest way to make a lot of money in a hurry."

Who are the property climbers in this series?

There are a few high rolling millionaires taking huge risks with other peoples' money but they're mostly ordinary Kiwis trying to get ahead through property.

Some have read all the Rich Dad Poor Dad books and attended property seminars. All are grappling with the usual investment questions. What size mortgage for how many years? Should they buy a do-up or a maintenance free dwelling? What style- apartment or bungalow?

More here.

09 February 2006

Holiday property buzz in Malta

With visitor numbers static in recent years and facing new competiton from former Eastern Bloc countries offering cheap holidays, the recent announcement by the Maltese government that negotiations were at an advanced stage with two low cost airlines has sparked hopes that the island will see a rise in visitor numbers, much to the relief of some in the tourist industry worried about the future of Malta as a holiday destination.

Even before the new carriers to the island land the existing airlines have been offering return flights at prices seemingly much lower than in the past to try and hold on to their share of the market.

Traditionally the UK has been Malta’s biggest market for incoming tourists, often making up over half of the island’s visitors in any given year, but some on the island see even this market as under threat. And property buyers from the UK have accounted for seventy per cent of Malta property sales to overseas buyers in recent years, settling in Valletta, Sliema, St Paul’s, Mellieha, St Julian’s and Qawra.

A good portion of UK visitors and property buyers for Malta in recent years have been ex-forces who served for the British during WW2 when Malta held out against Hitler’s Luftwaffe, and then in peacetime through to 1964 when Malta became independent, who returned for holidays.

But with the inevitability of this market declining a new breed of Malta’s holiday and hotel entrepreneurs see Malta’s future as less dependent on the UK tourist, and being more cosmopolitan in her outlook.

More here

Property funds in ISA's

Anyone looking to overload this year's ISA investment with property funds should think again, investment analysts have warned.

With yields falling and equity markets remaining buoyant, investors are being advised to keep only trace elements of property in their ISA portfolio.

The recommendation comes despite the fact that property funds qualify for ISA investment for the very first time this tax year.

Meera Patel, senior investment analyst at IFA Hargreaves Lansdown, said investors were attracted by the lack of correlation between property and equity markets but insisted falling returns simply could not justify any great confidence in this asset class.

For the last few years, we have been extremely cautious of commercial property,'' she told Reuters. ''Properties should usually be bought for their yields and these have fallen over the years. The capital growth from these is also usually very small so there is not much of a selling point there.'' Patel argued that if total returns were to be in the region of 6 per cent this year, a figure widely forecast, then this made property look expensive and equities appear much better value in the current environment.

She pointed to an uncertain economic picture as another reason for investors to be shy of property funds.

''If buildings become vacant as companies are forced to downsize, this could lead to a further fall in rental yields and property values overall.'' Patel concluded: ''We believe that investors should have no more than 10 per cent in property as part of their overall portfolio, given the outlook for the sector, and I wouldn't be surprised if investors currently actually had far more than this.'' Melvyn Bell, investment manager at Newcastle IFA Lowes Financial Management, echoed Patel's concerns over high weightings of property funds in investment portfolios.

Full article.

08 February 2006

Property market in Auckland slowing

The Auckland property market may be showing real signs of slowing, according to new figures released today by Barfoot and Thompson.

Barfoot said its January sales were the lowest for the month in the last five years.

The company has the the largest market share in Auckland and its sales figures are generally taken as a good indicator of trends.

The company recorded 797 sales in January, the slowest start to the year since January 2001.

This followed a slow December where 671 sales were recorded, well below the company average of about 1,000 a month.

Prices followed the trend, with a 13 per cent decline in average sale price from $492,882 in December to $428,385 in January and a 9 per cent decline year on year.

Part of the drop may have been due to non-market factors.

Full article.

06 February 2006

Taxing for overseas property investors

Ireland has changed from a country which sends its job seekers abroad to one which sends its capital abroad – often in search of overseas property investments. Irish investors in overseas properties range from those investing in large scale commercial developments, to those buying a second dwelling. The key issue in overseas property investment is not taxation so much as location and price. But a good location and a good price can be ruined by a bad tax surprise.

An investment in foreign property can be made in a variety of manners, ranging from acquiring shares in a company, to purchasing the property directly in the individual’s own name. There are other vehicles which may be used, including unitised funds, trusts, partnerships, co-ownership agreements with other investors, as well as a choice between entities created in Ireland, or those created abroad.

The choice of method of investment and type of vehicle has tax implications but may be driven by non-tax considerations. In some foreign countries which are not members of the EU, there may be restrictions on the purchase of land and buildings by non-residents. Where there are such restrictions, the investment may have to be through a local company or other local entity. There can also be banking problems if the Irish investor is financing the purchase in part through borrowings. Difficulties can be encountered in obtaining finance in Ireland on the basis of the security of an overseas property, and financial institutions in some overseas locations, especially non-EU locations, may have restrictions on lending to non-nationals.

Where the investment is not a direct investment, but is made through an investment vehicle of some form, this will usually involve administrative obligations and cost in relation to that vehicle. The burden and cost which these can represent should not be overlooked or under estimated.

The use of a vehicle to make the investment can have many tax implications. Some, such as a foreign co-ownership structure may bring about an overall Irish tax cost of 23 per cent, whereas others, (eg a company) may involve a double layer of tax before the individual investor recovers his money directly. One layer of tax could arise in the company on its income and on its gains, and another layer could arise on extracting the cash from the company. Where a vehicle such as a company is used to acquire a property (eg because of local legal restrictions, or to save stamp duty or its equivalent on the purchase of the property) and the individual investor later occupies the property eg as a holiday home or second home without paying a market value rent to the company, the individual may be exposed to an Irish income tax liability on imputed income broadly equal to the rent not charged. These are merely some of the many tax implications that can arise from the choice of vehicle.

An Irish resident individual is liable to Irish income tax and capital gains tax in respect of the income and capital gains respectively arising from world-wide investments, subject to certain exceptions where the individual is either not domiciled in Ireland, or not ordinarily resident in Ireland. Where foreign property is acquired through a vehicle, there may be an exposure on the individual to Irish taxation if the vehicle is regarded as transparent for Irish tax purposes eg many trusts, and partnerships.

As previously mentioned, certain forms of foreign co-ownerships may constitute offshore funds, and the tax liability of the resident individual investor may be deferred until money is extracted from the fund, and in some cases the tax may be capped at the rate of 23 per cent.

Where the vehicle is not an offshore fund, and is not transparent but is not resident in Ireland for tax purposes, the Irish resident investor may nonetheless have an exposure to Irish tax on the income and gains arising from the foreign property in some circumstances. This arises under anti-avoidance legislation which can attribute the income, or the gains, of the foreign company to the Irish investor. This is a complex area and its interaction with European law awaits clarification from the European Court of Justice.

Full article.

03 February 2006

Kiwis investing in Fiji property

Despite ongoing political instability, New Zealand tourists are thronging to Fiji in every growing numbers with visitor numbers expected to have topped 100,000 last year.

New Zealanders are not just going there to lie on the beach either - they're investing in holiday property.

Fijian Tourism Minister Pita Naa-Du-Vah, visiting New Zealand, says the number of Kiwis visiting his country has more than doubled from 49,000 in 2000 to about 108,000 last year.

The minister says there are a few reasons for the continuing rise in New Zealanders going to Fiji. He says the old relationship between the two countries has always been there from colonial times and is still very strong today.

He says with new opportunities for more investment in Fiji tourism, an "incredible number" of New Zealanders are investing in the sector, including in construction work.

The minister says New Zealand companies such as Fletchers are involved in construction work, working on roads.

But he says New Zealanders are also investing in hotels and villas in Fiji, and the double taxation arrangement Fiji has with New Zealand has helped New Zealanders who are buying holiday houses there.

Naa-Du-Vah says there were some bookings cancelled in early January amid political instability and he's here to give reassurance to the people of New Zealand and travel wholesalers that everything is well again in Fiji.

More details.

02 February 2006

Beware of foreign property deals

A series of promotions and advertisements are offering the dream of a holiday home in France at a fraction of the usual cost. But beware, because as with most things that sound too good to be true, there are drawbacks.

Clever juggling with the figures using a leasing scheme set up by the French government and a low interest-rate mortgage in euros makes it sound as if you could have a holiday home without hassle or the cost.

The scheme suggests that you put down a deposit of 20%-30% of the price of a property yet to be built and promise to lease it back to a management company which guarantees the rental return. Under the leaseback scheme, launched 20 years ago to boost tourism and investment, you escape the 19.6% VAT levied on new properties.

You might be promised 4% to 6% of the purchase price each year in rent (this is known as the yield) while paying from 3% for your French lender's mortgage.

So what are the drawbacks? Firstly, if you want to use your holiday home for a couple of weeks a year, the yield usually drops by at least 1%. But the biggest catch is the rental guarantee: it's only as good as the company offering it. If there's too much competition for holiday lets in the area, rents will fall or the company could go bust.

If the company is successful it can automatically renew the leaseback rental agreement at the end of the original term.

Full article.