Once the centre of the European property and holiday home market it seems as though Spain is going though a very difficult time at the moment. Rising debt, rising unemployment and a whole host of issues in the building industry have come together to kill the property market stone dead, but are things really as bad as they sound?

The thread brings a few interesting points into the equation, not least the fact that there are thousands of unsold properties in the region. This has led to problems in the estate agency industry with more businesses than ever closing their doors, thereby reducing the potential sales teams when the market picks up. The Spanish government are also reported to have increased the country’s debt to over £300 billion, a move which will have an impact upon government spending in the immediate future.

On a more upbeat note there are a few posters suggesting that a number of developments are up for sale at a fraction of the original selling prices and there does seem to be some interest. However, the Spanish property market seems to be making a bad name for itself at the moment with many investors being left with partly finished properties as substantial numbers of construction companies hit financial trouble – in line with the sector in the UK.

There is a mixed feeling as to whether the Spanish property market has bottomed out but it would seem unlikely we will see any major recovery until the European and Worldwide economies start to improve.

Summary

Like so many property markets around the world Spain is struggling to recapture the heydays of years gone by. Once the only market which British holiday makers and property investors were prepared to look at it seems that the emergence of other markets in Europe, together with the ongoing credit crunch, has brought the Spanish property market to a halt. There are also concerns that the growing number of unfinished developments will see future investors showing extra caution at what is being seen by some as a throwback to the earlier days of the market when the property sector was dogged by unfinished properties and bad investment advice.

The thousands of unsold properties and the dying estate agency sector is a major concern for investors now and in the short term. There were a number of comments on the post about property developments being sold for a fraction of the original price in order to bring in funds as well as a number of construction companies going into administration and bankruptcy. Interestingly we may well be seeing the ‘panic selling’ scenario which is often the first stage of a recovery and could mark the bottom of the market – or near bottom.

Like so many investment markets it is often the time to look again when EVERYBODY is saying the market has further to fall. How many times have we seen property markets fall just as EVERYBODY is saying it is time to buy?

Spain will always be a very important market to the UK ex-pat community and while the currency exchange rate is not helping in the short term there is no doubt that some investors are on the prowl for value investments at distressed prices. Spain is an interesting market and one worth keeping a very close eye upon.

Read the full thread on the current state of the Spanish property market

IMPORTANT UPDATE: Please note this law has moved on. Please see comments.

Not a very nice headline for those looking to buy property in Turkey but a true one never the less with news that the highest court in the land has suspended property sales to foreign nationals and foreign companies. This is a very interesting thread which shows how divided the property investment market is, some suggesting that the new laws will be introduced in a matter of days and others not prepared to enter into any agreements until the new laws have been passed. As with any investment market, confusion is the worst possible scenario leaving the situation open to rumours and counter rumours which are not helpful.

The thread itself reads like a timeline from the moment the law was passed and the government were given a three month period to introduce new laws, to the time when suspension of property sales to foreign nationals and foreign companies was suspended. There is also a very interesting comment from someone in the Turkish property market suggesting that the country has a history of changing property laws at a moments notice and causing widespread panic only to rectify the problem at a later date.

Many posters are looking at ways to get around the ban on non-Turkish nationals buying property but the market does actually seem to have come to a halt. There appears to be some pent up demand which should kick in when the laws are finally changed, but this has the potential to affect the property market for some time with investors now wary of what the authorities may do in the future.

Summary

In order for any property market to prosper and grow there needs to be a degree of stability, something which seems to be sadly missing in the Turkish market at the moment. A number of changes in property laws over the past few years have seen many investors take fright, concerned at what other changes the authorities may make in the future. When you consider that foreign investment in the country is vital this has potential ramifications for all areas of the Turkish economy. For this reason alone it seems inevitable that the government will need to address these problems as soon as possible and create a more workable framework.

So how will this ‘short term’ problem affect the overall Turkish property market?

There is no doubt that the problems have hit sentiment amongst foreign investor with many now fearing for the future security of their investments. It is this nagging doubt that this is not the last of the changes which will be at the forefront of many minds for some time to come.

While there is no mention of how property prices have been affected by the freeze of foreign property ownership there is no doubt that it will have affected prices. Will there be some short term attractive properties for the brave, as and when the new laws come in, or will the markets suddenly return to levels seen before the ban?

The ever increasing tourist market, with UK holiday makers very prominent in the area, will add some support to the future property market but sudden changes in the rules are not helpful for property investors.

Read more about foreign property investors in Turkey

Have you made a profit on your Spanish investment? Are you looking to sell up and move? What is your CGT position?

Even though this thread was added back in September 2006 it offers a very interesting timeline with regards to Spanish tax laws and in particular the complicated issue of capital gains tax if you are looking to cash in an investment.

The initial comments in 2006 seem to have alarmed many with the original poster citing the fact they had been advised they would need to pay capital gains tax of 35% on the value of their property. It is unclear as to whether the poster thought this was 35% of the total value, or just 35% of the profit, but it has opened up a useful debate on overseas taxation issues.

In 2006 the capital gains tax rate in Spain for non-residents was 35%, with 5% of the sale proceeds being held by the authorities immediately upon completion of a sale to stop sellers leaving the country without paying any tax due. While the headline figure of 35% has alarmed many, at worst it is only 35% of the actual profit on the investment – so if you bought a home for £100,000 and sold for £200,000 your liability would be 35% of the £100,000. But this is not the end of the story….

You are also able to add the cost of any investment into the property, e.g. you may have had an extension built or work on some of the rooms (assuming that you have receipts). This will further increase your cost figure and reduce your property cost. After calculating your CGT liability you may have to make an additional payment or if you have no gain you will then be able to claim back the 5% deducted at source. As the thread progresses the law has been updated to show a revised CGT rate of just 18% with only 3% deducted at source.

Summary

If you are investing in foreign lands you need to know the tax situation and what you may have to pay when you sell your property. While tax rates do vary across Europe, the EU is looking to move to a more consensus figure although there is some resistance and this may take some time to conclude.

This post not only acts as a useful thought provoking topic for those with investments in Spain (and other areas of the world) but it also shows how the Spanish tax laws have changed over the years. The post was originally added back in 2006 and has been updated by some of those who responded in the early days. Taxation can be a difficult subject for those who have not investigated this area of finance before and mistakes and misconceptions are common place.

Over the years the internet has taught people how to cut costs and adviser fees but there are some areas where it is very dangerous to cut corners. Taxation is one area where a simple error or miscalculation can literally cost you thousands of pounds and possibly put you in trouble with the authorities. There was a throw away remark about ‘doing a runner’ from Spain after selling the property in question but this would be a very bad idea.

It is vital to ensure that you are fully aware of the tax laws in the area in which you hold or a looking to buy property because there can be some nasty surprises unless you are prepared. Professional advice on the matter may cost you a fair amount of money, but at the end of the day you really have little choice if you want to do things correctly.

Read the full discussion thread on CGT in Spain.

Is the French property market dying a slow painful death? Or is it so fragmented that there are still opportunities for the brave? This thread was originally posted back in September 2007 but just recently it has been revived with much discussion about the state of the French property market. There are a few very interesting points being made, not least the fact that more prominent areas such as Paris seem to have a different property environment and direction than those properties located in the smaller cities, towns and countryside.

Much is being made of the current economic meltdown in the US and the fact that the mortgage giants Fannie Mae and Freddie Mac are on the verge of going under in the US – companies which between them hold about half of the US total mortgage market. The feeling is that problems in the US are already impacting on property markets worldwide and things look set to get worse before they get better.

There is also a very useful recap of the French property boom for the period 2000-07, a time when many people enjoyed great gains and it was seemed easy to make money in the property market. However price movements in 2008 appear to vary widely across the country but on the whole French property prices are down between 10% and 30%, something which many forum members expect to get much worse in the coming months. The main concern of many is the stagnation of the market and the fact that buyers have disappeared and nobody is sure when they will return.

Summary

Those who follow France closely will be aware that the country is the most popular tourist attraction in Europe attracting literally millions of visitors a year. As tourism and accessibility are two main factors of any property market, France scores very highly on both of these points and these are two good reasons why French property has done so well over the last six or seven years.

However, with worldwide economy under great pressure there has been an inevitable reduction in tourist numbers (something which will get worse before it gets better) and money is becoming tighter across Europe and the world. The English holiday home market is also suffering with less Brits looking to France for a second home, partly because of funding issues, the market and also an array of property scams which have made investors very cautious.

While the French property market has some similarities with the UK market, in that Paris and London have their own property environments very different from those smaller cities, towns and villages, Paris seems to have held up a little better than London at the moment. However, with property buyers now affectively on strike, massive discounts available for the brave, the short term outlook is not good for the overall French property market.

One forum member mentioned the need for ‘capitulation’ in the property market before the long term growth pattern can be resumed. This is a very interesting observation and one which is common place in the stock markets of the world in times of trouble.

Read the full thread about buying property in France.

With the current worldwide property boom along with every shrewd investor coveting to partake in the lucrative business of investing in buy-to-let properties, the most central questions should revolve around the location and the type of property that would provide the most rental yield and capital appreciation.

In the thread, most members have determined that Berlin has a market that is ripe for rental investments. One of the supporting reasons members have given would be the existence of a strong rental culture in Germany. Economic factors such as the country’s low rate of home ownership, the expensive property prices, and the limited access to mortgage products have given rise to this rental culture.

Panama places second when it comes to the number of members sighting this country as the most excellent location for rental investments. The country’s current low vacancy rate is brought about by the country’s thriving tourism industry where in the influx of tourists paved the way for the profitability of the country’s five-star hotels. Thus, these hotels are even fully booked most of the time. Aside from this, the current trend in the Panamanian rental market is the lease of fully-furnished apartments to tourists.

On the other hand, in terms of determining the best buy-to-let properties, most members have mentioned developments that were designed as resorts or properties that were within locations with a strong tourism industry. Some members even cited Morocco, the Canary Islands, and the Cape Verde Islands. However, a few members claimed that rental investments are best made with long-term rental markets and not the seasonal or short-term markets that are usually being featured by these tourist hotspots.

What is most central, however, is the fact that research and proper information about a desired property is essential before you even attempt to invest in these properties. A well-explored market can surely produce lucrative profits for such investments.

Whilst many property markets all over Europe are experiencing a halt and a leveling-off in their house price growth, investors have turned towards the eastern region of the continent – searching not only for emerging markets but for properties that are being sold at a relatively inexpensive price.

Of all the markets in Eastern Europe, Germany is the top choice of most analysts. In fact, it is deemed as an ideal location for property investment. This is due to its cheap house rates, which are in absolute terms and high rental yields. This goes even with the combination of the political stability and recovering economy of the country. At present, properties in Germany’s major cities can yield about 8% up to 10% at a time.

Germany is one of the few economically advanced countries in the world that has not experienced a house pricing boom in the last decade. The popularity of the country’s property market in the 1990’s, a period of sluggish economic growth in 2001, and the bursting of the Dot Com stock market bubble in the same year recorded unemployment rates. Moreover, the sudden bankruptcies of many citizens due to the housing market crash add up to all the factors that contributed to the stagnation of housing prices in the last ten years.

While market analysts predict an increase in housing prices in the future, a property market boom in Germany may not happen. This is due to the local markets’ performance, which currently does not show a leveled output. The market, however, shows much opportunity for investments in the rental market. Germany’s very low home ownership rate of 43% is likely to increase in the future. Rents are likely to rise as published housing companies, which have kept rental rates artificially low, are being forced by the government to sell their properties. In time, an impending shortage in housing developments will pose a major dilemma and, in turn, will subsequently raise the rental rates. Thus, it is the property boom that is being projected as an unlikely event until the next five years.

Find out more about the investment opportunities in Panama and Germany in the buying overseas property forum.

In the thread, numerous suggestions were shared by members. This is in response to the query of what would be considered as the best place for property investment. Because the question covered a large scope, different promising properties from several countries along with its features were mentioned. In addition, issues regarding the risks of investing, return of investment, safety, economy, and the climate of each area were discussed. Some of the places mentioned by members were the United States, United Kingdom, Spain, Dubai, Cyprus, Bulgaria, Morocco, Egypt, Thailand, Montenegro, Costa Rica, Brazil, Calabria, and Australia.

Thus, Bulgaria’s property market is not slowing down despite problems in other European countries. This is according to the latest figures from the Bulgarian National Statistical Institute.

Studies show that while many other areas in Europe are seeing house prices take a slump, residential property prices in Bulgaria have increased by almost seven percent during the first quarter of 2008.

Continue reading ‘Finding the Best Investment’ »

The main issue in this thread revolves around some properties that have already been sold in Bansko, Bulgaria. Members also discussed the potential investment opportunities involved in certain properties. One member even stated his purchase of a piece of property in Perun Lodge. It was a studio that was about 32sqm, which he had bought for approximately 68300 Euro last April 2007.

As for the general consensus, they had spoken out that due to the oversupply of real estate properties being built in the region, some of the properties being sold would sooner depreciate in value. Moreover, some members also thought that most properties sold in the region were somehow overpriced.

However, due to the unravelled beauty of Bansko, members reiterated the fact that buying a property there still holds good potential. This is all because of its beautiful environment and popular ski vacation reputation. In addition, the Perun Lodge was considered by some members as a best-buy-property due to its excellent facilities and extraordinary designs.

Continue reading ‘Amazing Investment Opportunities in Bulgaria’ »

Some members claimed that Cyprus, particularly Southern Cyprus, is an excellent region for investment since its economy is currently growing. Certain areas that members recommended for investments are off plan properties in Famagusta, Derynia, Paralimni, Kapparis, Paphos, Protaras, and Larnaca. These properties only had a beginning estimated price of CYP 58,000. This is even without the disadvantage of paying sourcing fees.

Moreover, there was a proposal about a development that is supported by the UK and Cypriot. There was also a suggestion to attend invitation seminars held in London. The seminars are held every 6 weeks and it will tackle about the advantages and disadvantages of investing in this market. These seminars are also held in Manchester, Leeds, Liverpool and in Dublin.

Despite the positive remarks, there were issues stated by a few members. One member said though Southern Cyprus possesses the potential for being a good area of investment, Northern Cyprus still has major land issues. One reason for this is that it is not an independent state as of today. Moreover, there is a chance of ending up empty-handed once a property is bought and a unification solution has been settled. Continue reading ‘The Economic Stand and Great Potential of Cyprus’ »