BEST OVERSEAS PROPERTY OPTIONS FOR 2006

Overseas property markets can be very lucrative for investors. So what are the best options for 2006? Irish Entrepreneur talks to two experts in the field, Paul Coghlan and Caroline McCarthy.

CATCH THE RIGHT FISH

Property investment is quickly emerging as one of the best options for serious and committed investors today. Successful property investors know that geographical diversification of their property portfolios reduces risk, thus making their investment robust and stable. They are also aware that the timing of the market entry is crucial in order to capitalise on the 'next big thing.'

An increasing number of people are hungry for overseas property investment and are using it as a tool to enhance their wealth. However, it is always advisable to use experts in this field, as, even though this is a lucrative investment, it needs to be handled with kid gloves. Even with the best markets, there is a need to be selective with investment property. What is largely essential is to get local advice for a reasonable view on rental and tax issues.

Investors must remember that the key to making successful property investment decisions now hinges on the ability to generate rental growth. Here we provide some insight into the markets, which, in 2006, have significant investment potential.

GERMANY

Having been through an economic slump in the last year, it is only a matter of time before Germany catches up with the European housing market boom. The attention is now focused on the political shake-up and the plans of the party to turn around the economy.

"This major European power is set to embark on an economic renaissance on the back of improving market conditions in 2006. The fact that 85% of Germans rent, rather than purchase property, makes it a very attractive buy-to-let environment and with house prices at their lowest in five years, it is an opportune time to invest," clarifies Paul Coghlan, founder and executive chairman of the Prestige Group.

Caroline McCarthy, director of international investment, CB Richard Ellis Gunne says, "there is value in investing in Germany on account of cyclical play and on buying into the recovery of the German market."

SWEDEN

Sweden has emerged as a prime market for property investment offering competitive prices compared to elsewhere in Europe. According to real estate giant IVG Immobilien, demand for office space in the Swedish capital is set to rise as it becomes a more important business hub with the Baltic Sea region growing in commercial importance.

"The growth story for Sweden is strong; relative to the EU average. Stockholm is a very international market both from a tenant and from an investment perspective. Like most European markets, the rental markets suffered from 2000 but we are now seeing a bottoming there and an improvement in office rents, mostly in core locations," opines Caroline McCarthy.

BULGARIA

Bulgaria is proving a very popular investment choice and is definitely worth evaluating. The prospect of EU membership and the strengthening economy has led to Bulgaria's rapidly developing property market. Prices remain low by western European standards but they are rising fast. Investors should also concentrate on the ski resort areas.

Paul Coghlan adds, "price increases in apartments have averaged 45% to 55% since 2002, with rental yields averaging between 7% and 11%. Sofia is quickly becoming one of Bulgaria's most desirable cities and as such Prestige Group will bring to market a luxury development that places purchasers in a secure low-risk investment."

NEW ZEALAND

With an Organisation for Economic Co-operation and Development (OECD) report stating that Australian property is overvalued, there has been a heightened interest in New Zealand residential property, particularly in the bigger cities as well as holiday destinations.

Paul Coghlan explains, "as an investment location, New Zealand has seen excellent returns in its property market. Resort investment vehicles are increasingly gaining in popularity and the fact that these types of structures bring strong rental returns with them, on the back of professionally managed hotel reservation systems, we will see many Irish investors entering into this type of deal over the coming year."

UK

Property investment in the UK is still very popular with many types of property to choose from. With the UK housing market set to pick up in 2006, what will matter is location and bargain hunting. Caroline McCarthy recommends investing in central London offices and Manchester grade 'A' offices.

"This is on the basis that over the last twelve months there has been a steady decline in vacancy rates and now the occupational market is picking up. The forecast for the next four years would be 'strong rental growth,'" says Caroline McCarthy.

POLAND

Poland's economic development and increasing prominence on the tourist scene is making it an attractive option for property investors. Its entry into the EU will ensure that prices will be on the up.

"Unemployment, at just 5%, is extremely low in Warsaw compared to the rest of Poland and wage levels have increased by 370% over the last 15 years. This increased wealth has also been reflected in mortgage lending, which improved by 35% between 2003 and 2004, supported by the fact that Poland has the economic stability of the lowest inflation level in central Europe," Paul Coghlan explains.

BELGIUM

Continental markets like Belgium are also interesting for the property investor because of relatively attractive yields when compared to UK and Irish commercial markets and the absence of currency risk.

Caroline McCarthy elaborates, "although it's a tiny country, it does get a lot of investor and tenant interest. Compared to any other city in Europe, there is more property occupied by the Government and this underpins the stability of the market. The centre of Brussels is a strong place to invest with growing rental rates and good tenant demand."

PORTUGAL

Property in Portugal's southern coast, especially in the Algrave, has been one of the hotspots for investors with consistent rising rates and exotic climate conditions. The stable economic and political climate in the country means no adverse effect on the value of your property investment.

"Portugal is one of the most established international property investment markets and also one of the safest. Resort-based property has always been a popular vehicle with Irish investors and it is simply unbeatable as a lifestyle investment structure," claims Paul Coghlan.

FRANCE

France has a stable capital growth history and is continuing that steady pattern. Both new and old properties have much to offer, and it is important to know what is suitable in terms of budget, location or holiday.

Caroline McCarthy advises, "there is merit in investing in offices in Paris because of their low vacancy rates. The city has very tight planning and it is anticipated that there will be rental growth coming into the markets. Some of the bigger regional centres for offices like Marseilles and Lille are attractive on a yield play basis."

FLORIDA

The sunshine state has experienced aggressive capital appreciation last year with 28% growth in the market. A good property appreciation rate, reducing bureaucracy and good weather keeps it attractive for investors.