The international property market couldn't be simpler. Essentially, there are two types of market: established – Spain and France, to name the biggest of the big two – where Brits like to own holiday homes, and emerging markets – the likes of Bulgaria and Estonia – where Brits invest in property. In the former, prices increase steadily but you also know that you can obtain finance and everything is safe, secure and above board. In the latter, big gains are to be made but there is the increased risk of legal complications that could leave you on the outside looking in through the window at the real owners of the property that you thought you owned. The former, moreover, are the only really desirable places to own property due to their climate and physical attractiveness, while the latter are only popular because they are cheap. That's the way it is, isn't it? Well, no...

Establishing the facts
When it comes to the established markets, we can be certain about the recent past: year-on-year property price increases of 25 per cent. But what about now? Says Eric Carter of family-run agency Elite Spanish Properties: "The Spanish market is still booming, but not as much as a year ago. After all, how long can you continue building before you reach saturation point? Some of the bigger players have had to downsize as the number of units they shift a month has fallen steeply." However, those who would now be inclined to brush the possibility of investing in Spanish property aside are missing a key point: established markets also have emerging areas, which haven't followed the national house-price trends but, once discovered, play catch up with the rest of the market.

Take the Costa de la Luz. Tucked away in a corner of Andalucia, for years this beautiful yet blustery coastline has been largely isolated while neighbouring Costa del Sol took all the plaudits and pulled in all the British property-buying punters. Until now, that is. Says Carter, "I think that the Costa de la Luz is the hottest area in Spain at the moment." But why now? "The bridge Ayamonte is finished, which spans the river between Portugal and Spain. This, coupled with road upgrades, means access via Faro in Portugal has become fast and easy", says Carter.

The impact on prices has been phenomenal. "Two years ago, a two-bed apartment was worth 110,000 euros; now, it's worth 160,000 euros." That's 45 per cent over two years: a rate of increase that certainly bears comparison to any emerging market you care to mention. And that's not the end of it. "Next year, these apartments will be worth 180,000 euros, and there's talk of a large golf resort being built here and development further up the river, so the area could have some way to go yet before price rises slow", predicts Carter. The same is true of the south coast of the Costa Calida. "In Marazzon and Aguilas, a two-bedroom property can be picked up for 150,000 euros. I would expect this to increase by 20–25 per cent over the next 12 months, and when Corvera airport opens near Murcia in 2007, maybe more", Carter says.

This emerging-within-established market also holds true for France. Paul Owen of French property agents VEF explains that "prices increased by 12 per cent nationwide in France last year, but Languedoc Roussillon saw the biggest hike – 28 per cent." Adds Owen, "I don't think it would be a wild assertion to say that in some areas of France, prices have doubled in the past five years. In some up-and-coming places like the Limousin, for example, prices of renovation projects doubled over a three-year period, 2001-2004." Again, this is the sort of gain that – if the established/emerging stereotype is to be believed – is supposed to be reserved only for the latter group.

As with Spain, it's the emergence of new property hot-spots within the tried-and-tested market that makes such gains possible. "The French property market of the past five years has actually been defined by the opening up of new areas, significantly due to the increased access led by low-cost airline alongside the greater access to information both in print and the Internet." Rather than being the exception, then, profitable pockets could actually be the norm in established markets. Says Linda Travella of Italian property agency Casa Travella. "People have realised that Italian property  is not expensive, partly because of new areas opening up."  In Basilicata, which forms part of the arch of the Italian boot, Travella represents a development within which apartments are available for 85,000 euros; even in Brit-beloved Tuscany such a budget would net you a conversion opportunity, while a new two-bedroom apartment with views of Lake Como would cost only 15,000 euros more.
 
So, established markets can offer properties at near-to emerging market prices, and you get the security of a cast-iron buying process, guaranteeing that the home you buy is the home that you – and you alone – own… Not so fast, cautions Clair Taylor of solicitors Grace and Co. "Just because the Spanish market is accustomed to British buyers it doesn't mean that there is no risk involved. There is often considerable pressure from the agents, combined with complex planning regulations, potential liability for a vendor's unpaid taxes on a property and the infamous land grab laws, where local taxes/contributions can result in you having to make ad hoc payments (for improvements) authorised or decided upon by the Town Hall which can result in part or all of the property being commandeered." Again, simple assumptions could lead you into trouble.

The emerging picture
In contrast to the old boy network of Spain, France, Italy, Portugal and Cyprus, some of the new kids on the block – Bulgaria, for example – didn't even have an overseas property market until the last five years. Not even part of the picture at the turn of the millennium, such destinations have been hastily painted in – and property price rises have been pretty hasty, too. Says Andrea Marie Portugal of Bulgarian agent Imoinvest, "Property in Bulgaria has risen by about 300 per cent in five years. In 2000, you could find an 80m2, two-bedroom apartment in Sofia for 15,000 euros. Now the same apartment has found new owners for 60,000 euros!" She adds, "Last year, there was an average increase of the property market of 45 per cent." And the Bulgarian property market has by no means reached its peak. "I anticipate a minimum 30 per cent increase before it enters the EU in 2007." But, of course, not all property in all areas will increase at this rate. Rather, property prices in some areas will increase above this percentage, while others will fall below. The trick, of course, is to invest in the former – with many Bulgarian agents plumping for the country's capital, Sofia, and its ski resorts over the Black Sea resorts.

Despite the growth in tourism to emerging destinations, almost to a man property agents in the established markets would argue that buyers who enter such markets are doing so purely out of affordability, not because emerging marketss can offer the climate and attractiveness of their more mature neighbours. Says Owen, "People buy in Bulgaria because it's cheap, not because it offers everything – such as value for money, climate, attractiveness, access and build quality." He adds, "It is important for investors to remember why property is an investment. Holiday homes to let out are only any good if enough people go to that country to rent them: buy-to-let to locals are only profitable if there are enough workers in the area earning enough money to pay you a decent rent; capital returns only happen when demand increases, requiring buyers. People will always go to France for holidays and there is at least a 'nearly guaranteed' market."

Certainly, agents in the emerging markets are under no illusions as to the main drawcard of the destinations they sell property in. Says Amar Sodhi of Avatar International, "Low prices are a big draw – the main factor is real or perceived investment value." However, Sodhi rejects the claim that it is price and price alone that brings buyers to less established shores. Indeed, he differentiates between emerging markets – once again revealing that a simple view of the international property market is misleading. "You can usually get a sense of the type of client interested in a market based on how the tourism industry in that country has developed. Croatia attracts the more discerning cultured traveller, and therefore buyers are usually looking for something a bit more special. By contrast, the main buying activity in Bulgaria is large off-plan apartment developments."

Another is Ben Mason of Someplace Else. "Many areas of emerging markets really do offer better value in all respects than Spain and France. The Bulgarian ski resorts, for example, are very picturesque (unlike many French ski resorts), and incredibly good value. He continues, "If you are looking for sun then Montenegro is warm year round, boasts a stunning coastline and beaches where for the price of a concrete apartment ten miles inland in Spain you can have a detached stone villa by the sea, so it certainly has very real advantages over the usual favourites". Mason also feels that Estonia is attractive enough to broaden its base from an investor's target to that of the second-home owner. "Estonia will only continue to increase in popularity over the next few years, mainly in terms of tourism and people looking for a holiday home rather than serious investors." While properties in the capital, Tallinn, are available for between 100,000 and 450,000 euros, head out into the suburbs and 65,000 euros is enough; while 20,000 euros would secure you a rural property. Mason points investors in the direction of Latvia, where apartments in period buildings in Riga, the capital, are available for 90,000 euros, or you could buy off plan just outside the city centre for 30,000 euros. Indeed, for those buying in Latvia, mortgages of up to 85 per cent are available – again complicating the simple view that emerging markets offer little or nothing in terms of buyer finance and security. Of course, other emerging markets do still have some way to go in this regard, and all generally do in terms of facilities, but that's not to say that purchasing property in such markets is as big a risk as it can be made out to be. As ever, the key is to do your homework – for emerging and established markets.

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Article first published in March 2006