OVERSEAS PROPERTY INVESTMENT

1
OVERSEAS PROPERTYINVESTMENT

• Monday 18th October 2004

2
Overseas Property investment

• What it is
• Comparison v other markets
• The return
• The risks

3
Overseas Property

• Too big to be dealt with here
• Snapshot only
• Need a working party
• Need professional advice
• WHY?
• Investment record
• No fun in investments
• Loss of 5 members

4
UNIT PRICE HISTORY
5
FTSE 100 INDEX1999 - 2004
6
UK HOUSE PRICE INDEX
7
UK Average House Prices
8
So what!

• Re mortgaging
• Main driver of UK overseas property
  investment
• Equity release in UK was 57bn 2003
• Coupled with
• Strong pound
• Cheap flights
• Desire to retire to the sun
• Lower house prices in Europe
• Mortgages down in real terms in W.Europe

9
European Property Prices

• Spain tops the property league
• Up 18.7 to Jun 03, 17.2 to Jun 04
• UK, up 17.6 to Jun 03, 13.8 to Jun 04
• France 12.9 to Jun 03, 14.5 to Jun 04
• 650,000 houses in Spain now owned by Brits.
• In 03, 40 of all houses built on the Costas
  were bought by Brits.
• 1.4million Brits own properties abroad

10
BUT

• Western Europe now represents high cost entry
• Investment would need to be in new or
  relatively new property.
• Entry level too high for CCCIC
• Missed the boat ?

11
Where

• TURKEY Mediterranean coast
• CROATIA Dalmatian coast
• MONTENEGRO Adriatic coast
• BULGARIA Black Sea coast
• SLOVENIA Adriatic coast
• MOLDOVA Black Sea coast

12
Why would we want to invest

• Jump on a bandwagon thats still rolling
• Anticipated growth rates of 20 pa
• If necessary could fund mortgage out of subs
• Rental income, gt 300pw would cover mortgage
  of 50k maintenance.
• Cheap holidays in the sun
• In effect we would

13

• Learn about property investment
• Earn a handsome income
• Have fun watching our money grow

14
Risks

• Collapse in property prices in W.Europe
• Have a mortgage to fund in a sliding market
• Political instability
• Property security
• Reliant on local management
• Stability and longevity of CCCIC
• And many more

15
What would we need

• To get in on ground floor investments
• New or relatively new property
• Coastal resort
• Serviced by low cost airlines
• Max. 3 4 hours flight time
• Sound legal system
• Political Stability
• Local mortgages ?
• Maintenance services

16
CROATIA

• Very popular with Brits when part of
  Yugoslavia under Tito
• gt 1000km Mediterranean coastline
• Av. Summer temp. 27 deg.
• 2600hrs sunshine annually
• In EU by 2008 member of NATO
• Beautiful girls
• Houses now becoming expensive
• Apartments start at c. 40k

17
But I concentrated on BulgariaThe new Spain

• Among the cheapest in Europe
• Joins EU in 2007
• 3 hours flight from UK
• All major tour operators by 2005
• 220km of sandy beaches 1700hr sun May to Oct
• Last year property rose by 30
• Ski and beach resorts

18
Why Bulgaria?

• Cost of living one of lowest in Europe
• Pint of lager 40p, 3-course meal -5
• Member of NATO
• Currency stable and linked to the Euro
• Predicting ROI 100 in 3 years
• New properties start at 40k / less
• Maintenance fees c.300euros per annum

19
The problems are many

• Apart from normal investment problems
• How do we as a club make a purchase ?
• How do we raise a mortgage ?
• Should we form a limited company ?
• Any volunteers for treasurer ?
• How do we deal with new and departing members
  ?
• Etc., etc., etc.

20
Recommendation

• Form a study group
• Define Group remit
• Group to report back in say 3 months
• Invite UK Overseas Property Agent to address
  the Club
• Invite Ivo Hesmondhalgh of Bulgarian Property
  Developments (BPD) to address the Club
• BPD set to join AIM within weeks