overseas property investment
DESCRIPTION
OVERSEAS PROPERTY INVESTMENT. Monday 18 th October 2004. Overseas Property investment. What it is Comparison v other markets The return The risks. Overseas Property. Too big to be dealt with here Snapshot only Need a working party Need professional advice WHY? Investment record - PowerPoint PPT PresentationTRANSCRIPT
OVERSEAS OVERSEAS PROPERTYPROPERTY
INVESTMENTINVESTMENT
Monday 18Monday 18thth October 2004 October 2004
Overseas Property Overseas Property investmentinvestment
What it isWhat it isComparison v other marketsComparison v other marketsThe returnThe returnThe risksThe risks
Overseas PropertyOverseas PropertyToo big to be dealt with hereToo big to be dealt with hereSnapshot onlySnapshot onlyNeed a working partyNeed a working partyNeed professional adviceNeed professional advice
WHY?WHY? Investment recordInvestment record No fun in investmentsNo fun in investments Loss of 5 membersLoss of 5 members
UNIT PRICE HISTORYUNIT PRICE HISTORY
Unit Price History
70.00
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110.00
Months(Starting J an 00)
FTSE 100 INDEXFTSE 100 INDEX1999 - 20041999 - 2004
FTSE 100 5-Year Index
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7000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quarterly Jan2000 - Oct2004
FT
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UK HOUSE PRICE INDEXUK HOUSE PRICE INDEXUK House Price Inflatio
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Date
Pric
e in
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93=
100)
UK Average House PricesUK Average House Prices
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ou
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•So what!So what!
Re – mortgagingRe – mortgaging Main driver of UK overseas property Main driver of UK overseas property
investmentinvestment Equity release in UK was £57bn 2003Equity release in UK was £57bn 2003 Coupled with –Coupled with –
Strong poundStrong pound Cheap flightsCheap flights Desire to retire to the sunDesire to retire to the sun Lower house prices in EuropeLower house prices in Europe Mortgages down in real terms in Mortgages down in real terms in
W.EuropeW.Europe
European Property PricesEuropean Property Prices
Spain tops the property leagueSpain tops the property league Up 18.7% to Jun 03, 17.2% to Jun 04Up 18.7% to Jun 03, 17.2% to Jun 04 UK, up 17.6% to Jun 03, 13.8% to Jun 04UK, up 17.6% to Jun 03, 13.8% to Jun 04 France 12.9% to Jun 03, 14.5% to Jun 04France 12.9% to Jun 03, 14.5% to Jun 04 650,000 houses in Spain now owned by 650,000 houses in Spain now owned by
Brits.Brits. In 03, 40% of all houses built on the Costas In 03, 40% of all houses built on the Costas
were bought by Brits.were bought by Brits. 1.4million Brits own properties abroad1.4million Brits own properties abroad
BUT:BUT:
Western Europe now represents Western Europe now represents high cost entryhigh cost entry
Investment would need to be in Investment would need to be in new or relatively new property.new or relatively new property.
Entry level too high for CCCICEntry level too high for CCCIC Missed the boat ?Missed the boat ?
WhereWhere
TURKEY – Mediterranean coastTURKEY – Mediterranean coast CROATIA – Dalmatian coastCROATIA – Dalmatian coast MONTENEGRO – Adriatic coastMONTENEGRO – Adriatic coast BULGARIA – Black Sea coastBULGARIA – Black Sea coast SLOVENIA – Adriatic coastSLOVENIA – Adriatic coast MOLDOVA – Black Sea coastMOLDOVA – Black Sea coast
Why would we want to Why would we want to investinvest
Jump on a bandwagon that’s still rollingJump on a bandwagon that’s still rolling Anticipated growth rates of 20% + paAnticipated growth rates of 20% + pa If necessary could fund mortgage out of If necessary could fund mortgage out of
subssubs Rental income, > £300pw would cover Rental income, > £300pw would cover
mortgage of £50k + maintenance.mortgage of £50k + maintenance. Cheap holidays in the sunCheap holidays in the sun In effect we would :In effect we would :
Learn about property investmentLearn about property investment
Earn a handsome incomeEarn a handsome income
Have fun watching our money Have fun watching our money growgrow
RisksRisks
Collapse in property prices in W.EuropeCollapse in property prices in W.Europe Have a mortgage to fund in a sliding Have a mortgage to fund in a sliding
marketmarket Political instabilityPolitical instability Property securityProperty security Reliant on local managementReliant on local management Stability and longevity of CCCICStability and longevity of CCCIC And many moreAnd many more
What would we needWhat would we need
To get in on “ground floor investments”To get in on “ground floor investments” New or relatively new propertyNew or relatively new property Coastal resortCoastal resort Serviced by low cost airlinesServiced by low cost airlines Max. 3 –4 hours flight timeMax. 3 –4 hours flight time Sound legal systemSound legal system Political StabilityPolitical Stability Local mortgages ?Local mortgages ? Maintenance servicesMaintenance services
CROATIACROATIA
Very popular with Brits when part of Very popular with Brits when part of Yugoslavia under TitoYugoslavia under Tito
> 1000km Mediterranean coastline> 1000km Mediterranean coastline Av. Summer temp. 27 deg.Av. Summer temp. 27 deg. 2600hrs sunshine annually2600hrs sunshine annually In EU by 2008 – member of NATOIn EU by 2008 – member of NATO Beautiful girlsBeautiful girls Houses now becoming expensiveHouses now becoming expensive Apartments start at c. £40kApartments start at c. £40k
But – I concentrated on But – I concentrated on BulgariaBulgaria“The new Spain”“The new Spain” Among the cheapest in EuropeAmong the cheapest in Europe Joins EU in 2007Joins EU in 2007 3 hours flight from UK3 hours flight from UK All major tour operators by 2005All major tour operators by 2005 220km of sandy beaches – 1700hr 220km of sandy beaches – 1700hr
sun May to Octsun May to Oct Last year property rose by 30%Last year property rose by 30% Ski and beach resortsSki and beach resorts
£17,
800
Why Bulgaria?Why Bulgaria? Cost of living one of lowest in EuropeCost of living one of lowest in Europe Pint of lager – 40p, 3-course meal -£5Pint of lager – 40p, 3-course meal -£5 Member of NATOMember of NATO Currency stable and linked to the EuroCurrency stable and linked to the Euro Predicting ROI 100% in 3 yearsPredicting ROI 100% in 3 years New properties start at £40k / lessNew properties start at £40k / less Maintenance fees c.300euros per Maintenance fees c.300euros per
annumannum
The problems are manyThe problems are many
Apart from normal investment problemsApart from normal investment problems How do we as a club make a purchase ?How do we as a club make a purchase ? How do we raise a mortgage ?How do we raise a mortgage ? Should we form a limited company ?Should we form a limited company ? Any volunteers for treasurer ?Any volunteers for treasurer ? How do we deal with new and departing How do we deal with new and departing
members ?members ? Etc., etc., etc.Etc., etc., etc.
RecommendationRecommendation
Form a study groupForm a study group Define Group remitDefine Group remit Group to report back in say 3 monthsGroup to report back in say 3 months Invite UK Overseas Property Agent to Invite UK Overseas Property Agent to
address the Clubaddress the Club Invite Ivo Hesmondhalgh of Bulgarian Invite Ivo Hesmondhalgh of Bulgarian
Property Developments (BPD) to address Property Developments (BPD) to address the Clubthe Club
BPD set to join AIM within weeksBPD set to join AIM within weeks