Access will also come into it as you need to decide how many times you wish to go each year and the length of time you intend to visit – this will be less important for investment-driven buyers. For example, France remains very popular for many reasons, including stability and affordability, but access is a signifi cant factor because it is possible to drive there, catch the train as well as fl y – something useful in the case of volcanic ash clouds, or families with lots of luggage or ski equipment. We’ve seen in recent times how budget airline routes can disappear as quickly as they appear, so never rely on just one carrier getting you to a place – it‘s just too risky, especially if you are hoping for rentals from overseas. Budget will also be fundamental, you may need to
weigh up the cost (and time) of travelling to somewhere with low property prices versus a more accessible location with higher prices. One obvious example is Florida, where since the downturn you can buy a three bed detached villa with a pool for little more than £100,000 - one of thousands of distressed property sales. But consider the cost of airfares - rising taxes and/or fuel costs - as well as the fact that weekend mini breaks aren’t really practical. The same might be said of other long haul destinations. However, climate is also important, and if you seek year-round sun either for personal wintertime escapes or to maximise rental yields, you could be looking to locations further afi eld. And remember that your rental business doesn’t need to come from British holidaymakers. If you fancy a holiday home in Fiji, you’d probably expect most of your rental business to come from New Zealand rather than the UK!
Buying for investment
If you are treating the property as an investment as well as a lifestyle choice, you will need to think more closely about how it will produce cash – there are three ways: rental income, capital appreciation and profi t by adding value (via renovation etc). Emerging markets will generally offer greater capital appreciation, and for this reason Turkey, Morocco and Egypt have been popular in recent years, but some are riskier than others with political stability becoming an additional consideration, and factors such as infrastructure and local bureaucracy to be taken into account. For rental income, city lets can be far more lucrative than countryside locations, as can busy beach areas, year-round resorts and golf or other leisure communities. Investors will also analyse tourist growth,
infrastructure changes and transport improvements over the long term. Five years ago EU accession was a key factor when buying in Eastern Europe; now the economic stability of certain members is a concern. But whatever your motivation do weigh up both risk and exit strategy. Risk covers whether a country is a so-called “safe” place to invest in terms of buying process transparency, local corruption, land ownership and title issues. Emerging markets may secure you a cheaper property, but you may fi nd it more challenging to resolve problems if they occur. Also consider, what is the resale market like? Will locals and other nationalities be keen to buy your home rather than relying on fellow British investors? Timing is important; exchange rate variations will have a bearing on how much you can afford in different areas of the world, as will mortgage availability and localised property market cycles: are they on the up or down?. For those wanting to relocate or retire abroad
permanently, the decisions are usually simpler: climate, cost of living, tax, and quality of life tend to dominate choices, along with job opportunities or family links. Common cultural ties and lack of language barrier make America and Australia popular, though less accessible than France and Spain, and the low cost of living draws people to Africa and the Far East. Moving abroad requires extra considerations, and we’ll look at this later. Finally, don’t make the mistake of choosing
somewhere which practically closes down – or gets terribly cold – out of season. Unless that is exactly what you want, of course…
TOP TIPS
Ë Why do you want to buy overseas? Analyse exactly what you want from a property in terms of lifestyle and/or investment.
Ë What is your budget? Compare local property prices with the travelling costs to get there and running costs. Also, can you borrow money easily there?
Ë Access is crucial. Consider how many times you want to go, how long it will take and reliability of transport.
Ë If rental income is important, focus on dual season locations which bring in a greater number of weeks’ income.
AIPP CONSUMER GUIDE 11
SECTION 2 PLANNING YOUR PURCHASE
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