Budget Bargains: What can I buy for £50k?

Published 17th May 2007

If you're feeling adventurous, you can find cheap property abroad with good potential returns…

Faced with the decision of how to spend a modest lump sum - say £50,000 - on overseas property, you would be forgiven for feeling the need to lie down and recover.

It seemed easier six years ago, when 82 per cent of British buyers (according to new Savills research) stuck to prime European destinations: Spain, France, Italy and Portugal. That figure dwindled to 62 per cent last year when the likes of Morocco, Dubai, Bulgaria and Croatia entered the equation.

While the Indiana Joneses of investors have already moved on to Albania, Ukraine or past war zones - as one developer, with an eye on West Africa, expresses: "As soon as the bullets stop, that's the time to invest" - even the less experienced buyer now prioritises investment over lifestyle and leisure, shows Savills' Second Homes Abroad 2007 report.

So what we all want to know is: where can we pay the lowest prices and entry costs to make the highest rental returns and capital growth in as short a time as possible - oh, and with minimum risk?

Given a £50,000 budget, the investor's options will be limited. In 2002, 8 per cent of the properties we bought abroad cost less than that sum. Last year, due to capital growth in all emerging markets, that figure dropped to 2 per cent.

Alise Crossick from Ready2Invest, author of The Little Book of Big Deals, advises:
"First time investors should aim to learn about property investment in the same way they learn about their everyday jobs and understand on a common-sense level what makes a good deal and where the demand comes from and if it is sustainable," she says. "High domestic demand and restriction to supply is what generates growth and a resale market."

Below is a list of bargains investor could consider if they want to snap up a bargain.

Western capital
BERLIN, GERMANY
Why Berlin? A Western capital but still emerging from reunification and a culture of low home ownership. "The property market is on the turn and now is the time to buy," says Gregory Lu from Imoinvest International.

What will £50k get you?
Studios from £16,500 in Neukolln, a low-income, central neighbourhood, or from £23,000 in Basdorfer, popular with students, through Imoinvest. With £50,000 and a 50 per cent LTV mortgage you can afford an apartment in leafy Charlottenburg in western Berlin.

How much can you expect to make?
"Realistically, 10 per cent per annum over the next five years. We would advise holding on for 5-10 years," says Lu.

Rental yields?
Berliners are used to renting long-term and buying already occupied flats saves you the hassle of having to find tenants. Expect 4-6.5 per cent p.a net.

Good for a first-time investor?
Individuals buying one property may struggle to get a mortgage, but Imoinvest buys entire blocks then sells off apartments to investors. Prices are unfeasibly low for a capital - particularly one as appealing as Berlin. Budget for 10 per cent buying costs on top of the purchase price.

Emerging East
BUCHAREST, ROMANIA; SOFIA, BULGARIA
Why Bucharest or Sofia?
Ski and beach resorts rely on good weather and seasonal tourism; capitals don't, which is why experts consider the capitals in these two new EU members the safest option for investors. Money is pouring into beef up the infrastructure in both cities, and there are strong local, year-round rental markets.

What will £50k get you?
Bucharest: a well-located studio/small one-bed apartment from £40,000 in flash new residential towers with shops, sports facilities near the central Unirii Square, or at Planorama, from £37,000, both from The Right Move Abroad.

Sofia: Studio apartments in Prestige Residence from £33,000 through Imoinvest, in a good residential area. "Or supplement your capital with a mortgage and go for something like Silver City, a prestigious development 10 minutes from the centre, with one-bed apartments from £86,000," says Imoinvest's Andrea Marie Portugal.

How much can you expect to make?
Bucharest: "The market can double in the next five years. I would advise this time frame as the minimum strategy," says The Right Move Abroad's Jeremy Casey.

Sofia: "If the market follows the same pattern as Tallinn or Bratislava, prices should double in three to five years," says Portugal.

Rental yields?
Bucharest: 7-8 per cent per annum. "There is a strong rental market among expats and middle-class Romanians," says Casey.

Sofia: 4-6 per cent per annum net. "Rents are rising and expected to do so solidly over the next few years and Sofia has a 12-month rental market," says Portugal.
Good for a first-time investor?

Bucharest: The capital gains are promising and the city is visibly on the up. There's no finance available for foreign investors yet, though experts predict mortgages will emerge soon.

Sofia: The city lacks a wealthy local market for expensive apartments, so you'll be reliant on foreign investors.

Far-flung
DUBAI, UAE
Why Dubai?
This Disneyland-style desert emirate with the its multitude of ski slopes, theme parks and shopping malls is a fascinating place that has captured the attention of investors - many of whom have already done well by flipping properties before completion.

Over-supply of new apartments is a concern, given that many will reach completion simultaneously, but, says Ian Clarke, Director of Our Home Abroad: "Dubai has an excellent tourist industry, easy access from the UK and worldwide and it's the business hub of the Middle East - which all point to a very sustainable future."

What will £50k get you?
Studio flats at The Lakeside, a new development ready in 2010 in an area where 100,000 jobs are being created, "therefore good capital and rental investment," says Clarke. "The studios are good value for money. Capital growth and rental return should also be good against a capital outlay of a relatively small amount."

For just under £50,000, Key2Dubai have apartments at International City, likely to be rented by workers at the vast new Dubailand sports and residential resort.
How much can you expect to make?

24 per cent annual capital growth at The Lakeside, says Clarke.

Rental yields? 7-10 per cent. "Rents are at London levels and tenants often have to pay a year's rent upfront," says Key2Dubai's Ala Settodeh Far.

Good for first-time buyers?
An unknown quantity, since little has yet reached completion, and big gains have already been made in the past four years, but there are still opportunities if you pick a high-quality development in a prime location with good rental demand.

Old Med
ALMERIA, SPAIN
Why Almeria?
Strict planning laws, a ban on seafront or high-rise building and abundant protected parkland means this region of southern Spain won't become another overdeveloped costa. A new motorway, due in mid 2008, will open up the region.

There is good rental potential, given ample golf courses, great beaches, budget flights from the UK to Almeria, Malaga, Alicante or Murcia airports (all within a two-hour drive) and year-round sun.

What will £50k get you?
Santa Ana golf apartments with sea views from £183,000, through Ready2Invest - but only 10 per cent deposit required, so only £18,300 equity needed.

How much can you expect to make?
"Property growth in the region has been higher than the average 8 per cent per annum elsewhere in Spain," says Ready2Invest's Alise Crossick.

Priced under market value, there is also short-term investment potential for those who want to sell soon after completion.

Rental yields?
Golf properties rent for around £450 a week in the summer, Easter and at Christmas, and from £150 a week in low season.
Good for first-time investors?

It's a mature, established market, offering great reassurance to nervous first-timers rather than an emerging market - though possibly with lower capital growth. There is a strong rental demand.

When selling, "your primary resale market is Spanish families looking for holiday homes. They make up 80 per cent of coastal apartment buyers in Spain," says Crossick.
Source: The Independent

Source: ' Move Channel Ltd '

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