The great Chinese takeaway
If shrewd overseas property investment were simply about finding which national economy was booming, then almost every penny would be invested in China.

After all, according to the World Bank, China has the fastest growing economy in the world, with GDP growth at 9.00 per annum over the past 21 years. Foreign Direct Investment (FDI), which has increased at 26 per cent a year for the past 14*, has helped drive the Chinese economy onwards, while incomes in urban areas increasing an average of 8 per cent a year since 1998** has been one of the results.
Sources:
*US-China Business Council; **Business Week

Unsurprisingly, with such an increase in both the prosperity of urban-dwelling Chinese and the number of foreign workers seeking big salaries in the country, property prices have followed the general economic trend, increasing nationwide at 10-40 per cent per annum for the last five years.

However, China's world-leading economic growth doesn't make its property investment market a law unto itself. As with every other overseas property transaction, only the right property in the right place at the right time with the right price tag will bring financial rewards.

Pauline Scrace from International Horizons believes that apartments in Shanghai currently represent some of the best overseas property investment potential in China.

"Shanghai is the business and trade centre for the country, and has many opportunities for investment for the domestic buyer and overseas property investor. It has one of the world's major ports and has a large expat community because of its international outlook. Prices for similar apartments in London, Tokyo, New York and Hong Kong can be two-thirds higher."

With plenty of room to grow until they reach a price ceiling, property values in Shanghai have made a fast start, as Judi Storer from Property Frontiers reports: "The Shanghai Government Statistics Bureau calculated that the price of real estate grew by a quarter in 2003, by 20.4 per cent in 2004 and 20.1 per cent in 2005". 

She continues, "As the city is still growing, property here is being offered at a fraction of the price of that in Hong Kong, Tokyo and Taipei. There is a good capital growth investment potential, with price rises likely in the near future. It is estimated that commercial property prices in the Pudong financial area will increase by 50 per cent until the year 2007."

Certainly, as with any overseas property investment in a city, apartments with a good location and close proximity to excellent transport links tend to offer returns on investment at the higher end of expectations.

Both Storer and Scrace believe that, in this respect, Pudong is the right location. "In 1990, Pudong was a run-down semi-derelict riverside plot, but 16 years on it is one of the best areas of Shanghai", Storer explains. "This is an area which is attractive to business travellers, as it has good transport links, easy access to the business areas and many international companies and wealthy residents. Commercial property is probably the best investment bet here, in the shape of apartments in hotel complexes (where guaranteed rental is frequently available), or business premises."

Scrace believes that Dijie International Town, which is only 12 minutes to Pudong International Airport by maglev train and has good amenities nearby, is a solid opportunity. Here, two-bedroom apartments start from £68,000, plus agency fees.

Alternatively, for a one-bedroom apartment in the Pudong district, Property Frontiers is currently offering rooms in the G-Bridge hotel from £25,000, with a guaranteed rental return averaging 8.9 per cent for 18 years and a buy-back guarantee after ten years of purchase.

Finding property with such investment guarantees is usually no easy task, warns Storer: "It is still extremely difficult to find property with guaranteed rental in Shanghai, though when these are found, rental returns currently stand between 6 and 10 per cent".

She continues, "As property rental costs are comparatively high, they may not rise in line with property prices, meaning that there may be a drop in yields to 5-7 per cent, which is nonetheless a healthy return."

But, as both Storer and Scrace would agree, price rises are obviously subject to national and international factors and, like all emerging markets, there are no guarantees no matter how bullish you feel about your chances of making a sizeable profit on your investment.

For more information about China:
International Horizons 
Property Frontiers 
 
 
Caribbean catch-up
For years the Caribbean was an exclusive club: Barbados, the Bahamas, Antigua and St Lucia were the only members allowed – and it was ensured that not just anyone could be a property owner there through hefty price tags and a refined air of exclusivity.

However, those neighbouring islands almost left behind by the rich club, despite having all the natural beauty of the big three, are now getting in on the act – and, crucially, when it comes property prices they currently have a much more inclusive approach.

Certainly, the Dominican Republic, Grenada, Panama and Belize all fall within this bracket, as does St Vincent and the Grenadines. Here, on the Buccament Bay development, cabanas are available through Overseas Dreams from £140,000 and come with the option of a 10 per cent guaranteed rental for two years followed by a 50/50 shared basis for the subsequent three years.
 
Robin Barrasford, managing director of Overseas Dreams, says, "Early purchasers in Buccament Bay have already seen prices increase by 30 per cent in the last six months as the popularity of St Vincent grows. We expect the increase in prices to continue as the market matures within the next five years and tourism on the island gains momentum. A second phase of cabanas has been added in answers to the demand, meaning the development now has a total of 209 cabanas."
 
Those casting a property investment eye to the Americas should also put the Dominican Republic on their shopping list, according to Scrace, who feels that it offers one of the best overseas property investment potentials in the region.

She explains her choice as follows: "The Dominican Republic is moving upmarket. In the past the three-star holiday complexes were the first Caribbean holiday for many people who couldn't offer the exclusive islands, but these are past their sell-by date. The Dominican Republic government recognises this, so emerging now are five-star developments with marinas, golf courses and equestrian centres."

The crucial detail here, as Scrace says, it that "All of this is available for a fraction of the price for equivalent property developments in Barbados, Bahamas, etcetera".

So where should one look to make an investment in property in the Dominican Republic, and what sort of property should one set one's sights on? "On the northern coast, prices for refurbished studio in a gated community are from £16,000 and two-bedroom villas from £30,000", Scrace answers.

What about for those with bigger budgets? "There are fabulous five-star developments with entry-level prices from £100,000 on the eastern coast", she replies.

But isn't the Dominican Republic too far from the UK to make money from holidaying Brits? That doesn't really matter, says Scrace, as "The Dominican Republic is the number one tourist destination for Canadians and there are also many flights from the USA. It is very good value for money, an island where tourism infrastructure is in place and which offers lots to do."

For those planning an overseas property investment in the emerging Americas but not sold on the idea of buying property on an island only, a little downwind of the hurricane belt could instead explore property options on Brazil's north-east coast, where £40,000 will get your foot on the new-build ladder and four times as much will get your foot in the door of a high-spec villa.

For further information about the Caribbean:
Overseas Dreams
International Horizions

North African ambition
Compared to alternative emerging markets, Morocco "simply ticks more boxes", according to Rob Shaw at Morocco Properties. "The weather is far warmer than Bulgaria, it is much closer to the UK than Dubai or Turkey and with beachfront property prices from around £40,000, and it is just as inexpensive."

Morocco's economic outlook is also promising. Tourism grew by 18 per cent in 2005, providing seven per cent of GDP. Not content with this, the government has established a comprehensive plan to increase tourism to ten million visitors by the year 2010, bringing in nine billion euros of foreign exchange and creating 600,000 new jobs. As part of this initiative, the Moroccan government has created the Plan Azur – several luxury resorts on the coastline aimed specifically at those looking for an overseas property investment opportunity. Prices are significantly lower than established property markets such as Spain and Portugal, where a beachfront villa would cost four or five times the price. Here, at the Saidia development on the Mediterranean, one-bedroom apartments are available from £45,000.

But will property prices stay this way? Definitely not, Shaw replies confidently: "My prediction of capital appreciation over the short, medium and long term would be 10 per cent per annum over the next five years, levelling off for the medium term once the government's initial objectives, infrastructure and access are more established (when those who made their initial investment will start reaping the rewards) and then increasing again to between 7-10 per cent appreciation in the long term as more and more routes into the country are established and prime coastal / urban property becomes shorter in supply."

If you have a budget big enough to make an investment in property in Morocco, but would rather spend it in another emerging market, then the Cape Verde islands off the African coast south of Morocco are almost within your reach. If you can scrape together another £10,000, then a one-bedroom apartment on the island of Sal becomes a possibility, and although you'll currently have to remortgage to pay for a flight to the islands – due to the lack of direct flights from the UK – in November you'll be able to fly direct and save a few quid on the current cost of tickets.

For further information on North Africa:
Morocco Properties
Cape Verde Property
 

Balkan nest egg
For the first time in several years, Bulgaria has received a less-than-positive analysis of its overseas property investment potential. Recently, overseas property investment company Assetz released its autumn property tracker, which warned that annual returns on Bulgarian property have now 'plummeted' 60 per cent to 44 per cent.

This is too much of a generalisation, of course, but the Bulgarian gold rush fever that gripped seemingly every Brit with the merest whiff of equity in their UK property may finally be beginning to wear off somewhat, although news that Bulgaria will almost certainly be joining the EU in January 2007 should give prices a push in the last quarter of 2006.

Even if Bulgaria's short-term investment prospects are not as surefire as they once seemed, that still leaves medium- and long-term gains to play for.

In this respect, it is interesting that Amar Sodhi, the managing director of Avatar International – which effectively specializes in emerging market property – should pick Bulgaria as being a better long-term bet than either Turkey or Montenegro.

"For long-term overseas property investment, I recommend Razlog in Bulgaria, a destination which has recently come to the attention of investors because it offers the genuine prospect of year-round letting", Sodhi explains. Here, Avatar has apartments available from a tempting £28,000 – and Sodhi is a big fan of the Razlog area.

"Razlog is a stunning region, located six kilometres from Bulgaria's most popular ski resort, Bansko. It is currently undergoing a period of transformation and will be home to Bulgaria's first luxury 18-hole golf course, designed by Ian Woosnam. This is a major draw for people looking to make an investment,s who will be able to rent their property to golfers in the summer and skiers in the winter, both of whom are traditionally from a high income group."

Of course, potential buyers shouldn't necessarily get too carried away with the prospect of 52 weeks a year of rental income. These properties are, after all, primarily golf resort properties, and avid skiers coming to Bulgaria are likely to choose to stay much nearer the gondola station in Bansko, if possible. It could be, of course, that the expansion of Bansko's skiing area links directly to Razlog, but we'll have to wait and see.

Sodhi adds that the area's long-term investment potential will also be helped by Bulgaria's bid for the 2018 Winter Olympics and the impending membership of the EU – both of which will "open Bulgaria up to a wider audience, as its media profile is likely to grow".

The same could be said for Romania, which should be joining the EU in January 2007 alongside Bulgaria.

Something of a slow starter in the property popularity stakes with Brits, Romania nonetheless does offer similar overseas property investment potential to Bulgaria. And should this country of 23 million make the progress required by the EU then those who've long been championing its property potential could be dishing out 'I told you so' a few times in the coming months.

Already, there are signs that Romania is becoming easier to do business with as its property market is opened up to the competitive forces of the European economy. It has been reported that officials at Bucharest's Baneasa airport have held a series of discussions with Ryanair, as well as other low-cost operators, to start new flights early next year. This will be in conjunction of a multi-million euro upgrade of the airport facilities, to service the increasing numbers visiting Romania.

Tahir Ali, managing director of Romania Revealed, believes that Romania's attractiveness to multinational investors, a lack of recently built rental property and low property prices compared to Western standards - property prices in the capital, Bucharest, average £50,000 – will make for a winning combination. "We feel that the long-awaited EU accession will allow Romania to really compete with other European property markets", he says.

Among the properties on offer from Romania Revealed is the Melbourne Residencies, a development just north of Bucharest where three-double-bedroom, two-bathroom properties are available from £81,800. A two-year rental guarantee contract of 7 per cent per annum is also on offer.

Like Bulgaria, Romania's property market offers a little bit of everything – city investment in the capital and second cities such as Timisoara, fledgling mountain resorts like Moneasa, spa destinations such as Baile Herculane -properties in all three areas are offered by PWT in Romaina  - and of course coastal holiday homes on the Black Sea. Here, one-bedroom apartments in the Cronos development near the resort of Constanza start from £49,000.

Readers wondering if it is too late in the day to make an overseas property investment in countries on the verge of EU membership and who would therefore rather look for a destination with all of that price rise potential ahead of it could head south-west across the Balkans and consider Montenegro instead.

Recently independent, and with plenty of work still to do to become a member of the EU, Montenegro offers emerging market potential by the bucketload. Blessed with a glorious coastline featuring white beaches of fine pebble and tree-clad mountains that plunge straight into the sea, the country still offers rock-bottom prices. For example, £30,000 would be sufficient to secure a studio in one of the leading resorts such as Kotor Bay, while two-bedroom apartments are on the market for little more than double this figure.

For further information about the Balkans:
Avatar International
Romaina Revealed


Basement level Lithuania
While all three Baltic States are believed to offer good overseas property investment potential backed by dependable buying procedures and sound economic fundamentals, it's Estonia that has jumped ahead of the pack. With its higher Foreign Direct Invesment (FDI) and swelling ranks of aspirant middle classes, Estonia's capital, Tallinn, has definitely leapt ahead of Vilnius, Lithuania's capital, and Riga, the capital of Latvia, in terms of property price growth.

But can Tallinn keep on booming as it has been? Absolutely, says Darren Goodson of TallinnProperty.com: "Overseas property investment potential in Estonia is enormous. FDI increased over 100 per cent in 2005 compared to 2004. This make's Estonia's FDI investment per capita the highest in Eastern Europe. It is destined to be the Hong Kong of Europe."

So how does this translate to property investment potential? "Skyscrapers are being developed and there are many more in the pipeline. They simply cannot build them fast enough. This scenario is likely to continue", Goodson predicts.

But being first out of the blocks can have a downside: Prices can start to appear unappealingly high compared to neighbouring countries with – arguably - similar investment potential. So, with upwards of £80,000 now needed to enter Tallinn's city centre property market (twice as much as required on one of its seaboard suburbs), prices in Vilnius, for example, appear invitingly low by comparison.

Ben Mason, of Someplace Else (which, like Avatar, also has a whole portfolio of overseas property in emerging markets), is one agent currently turning his attention to a Baltic neighbour of Estonias.

"One of the best medium-term overseas property investment opportunities at present is in new-build residential property in Vilnius", he says. "One-bedroom apartments start at about £30,000, and what makes Lithuania such an attractive investment location is the fact that only a 10 or 15 per cent deposit is required, with no stage payments and then a local mortgage can be taken out upon completion. This means that with literally only £5,000 to £7,000 cash you can own an apartment in Lithuania, including all fees."

Undoubtedly, though, Mason feels that prices won't stay this low. "Capital growth is currently in excess of 20 per cent, and the investment boom that Estonia and Latvia have experienced over the past three to four years is spreading to Lithuania."

As a result, Mason expects those only putting down a 10 per cent deposit and with annual capital growth of 20 per cent, those taking the plunge with see a "200 per cent return on your investment".

For those sold on the idea of overseas property investment in northern Europe, the Baltic States are by no means the only option. Poland, too, is worthy of attention for those looking for a long-term city investment, while Germany is widely tipped to offer capital appreciation and rental riches, although experts are divided as to whether now is the right time to enter the property market. It is interesting to note, however, that investment funds specialising in overseas property have placed significant stakes on German city property in recent months, while Japan's once dormant economy is now rising again and also attracting the attention of property fund managers.

And, finally, how about something completely different? If global warming threatens to turn already hot countries into sweltering ones, perhaps it will turn cold climes into balmy ones – prompting a mass exodus north in search of comfortably cool surroundings?

If this is the case then maybe property in northern Finland is a good bet. Here, £100,000 will get your rather cold foot on the icy ladder of Finland's property market, but should you be brave enough to take the plunge there are some property agents who claim that the return on your investment will be as hot as a sauna.

For further information about Lithuania:
Some Place Else

Overseas property investment
A few key tips:
1. Always do your own research. Property agents are in a great position to tell you about the state of the market, and one would assume that they wouldn't have agreed to market a certain property unless they believed in its potential. However, there are some agents who would rather make a sale at any cost rather than protect the future of their business by doing the right thing by their customers.

2. Don't make assumptions or generalisations about property markets and the investment potential. Just because a certain pattern of property price growth was witnessed in one city doesn't mean it will inevitably happen in a city that appears to be following a similar path. Yes, there are certain trends, but not all predictions are accurate.

3. Always buy the best property for the best price for the purpose you are buying it for. In this respect, not all properties are built equal – even within the same development. Some have better locations within the building, better proportions and better views. These tend to sell first, so sometimes you have to accept that you've been too slow getting to the marketplace, and move onto the next development.

4. When buying a property to rent or sell on, try to think like the potential end user or next buyer. For example, if you were renting an apartment at a ski resort, would you rent one a bus ride away from the ski lift system when a similar apartment was available for a similar price just across the road from the gondola station? Don't get attached to the property and start putting your own stamp on it. Property investment requires clinical thinking based on hard facts.

5. Always take legal advice about your investment in the country you have your sights set on, otherwise you could spend thousands and end up with nothing.

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Read other articles about emerging property markets:
Investors take advantage of Dubai's vision
Estonia property: one to watch
Czech Republic property in demand
Brazil property catches the eyes of Brits

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Article published on 29 September 2006