Property Investment Opportunities, Why Invest in Property?

There is currently a global boom in real estate, with sectors such as offices, hotels and retail sharing the wealth. This is termed a property bubble and its periodical occurrence means increases in valuations, but as this boom slows down it is a good time to invest, since new opportunities are available for less outlay. There is no crash as in the stock markets and, because of inflation, prices generally stay flat for a period rather than falling. The current boom includes countries such as the US, UK, Spain, Portugal and Romania, with new emerging locations where bargains can be found for as low as 20,000 Euros (or £15,000).

It is said that diversification is the key to successful investment and property is traditionally regarded as safer than playing the stock markets – experts recommend a 70% share for older investors and around half of those surveyed with second homes abroad had bought them as an investment towards retirement. Commercial property particularly offers plenty of opportunity, whereas the future prospects of shares are in doubt. Established properties near cities and beaches or apartments in prime locations obviously form some of the best investments, but it is important to research any market thoroughly to ascertain prices, letting markets (whether through tourism or locally) and factors affecting re-sale etc.

For instance, the stable economy of Spain, a familiar destination for tourists and expats alike, with around 2.8 million legal foreign residents, makes it a high target for foreign investment and a safe long-term prospect. The Spanish Ministry of Tourism has predicted that over 1 million foreigners will settle on the coasts in the next six years and that by 2025 this will reach over 3 million. Turkey is also excellent, with good potential for growth in terms of prices and rental demand, provided the location is chosen well.

Some of the benefits of commercial property investment are healthy returns, a relatively high income yield and low volatility, particularly where there is stable economic growth and low inflation. It is thought that in the next few years, a diversified portfolio of commercial property will make your money work well for you, generally outperforming bonds and cash. Leaseback schemes are an increasingly popular, trouble-free and cost effective method of financing investments and real estate investment trusts (a new form of listed property investment) provide tax advantages compared with more traditional investment products.

In the first six months of 2006, cross-border investors accounted for almost half of the €89.7 billion invested in European real estate and other less mature markets in central and eastern Europe are growing fast.