Why Invest in Central Europe?

For many UK based property investors, buying abroad means two things rather than one. The location of the property is half of the reason many of us choose to invest overseas. The second, of course, is the expected return for the investment. In many cases, the decision to invest is made when the two elements combine. Put another way, many British investors opt for a second home in the sun which provides a bolt-hole and a growth opportunity

For many UK based property investors, buying abroad means two things rather than one. The location of the property is half of the reason many of us choose to invest overseas. The second, of course, is the expected return for the investment. In many cases, the decision to invest is made when the two elements combine. Put another way, many British investors opt for a second home in the sun which provides a bolt-hole and a growth opportunity. Therefore, property hotspots around the Mediterranean have long been popular with Brits who have tended to neglect central Europe. The combination of potential high capital growth and a holiday destination can be all too tempting.

Nevertheless, some investors don’t see overseas property investments in that same way. Buying abroad to yield a rental income is what it is all about for many types of investor – especially those with sufficient capital to invest in multiple dwellings in a region or even a single development. For investors of this type, holidaying and pleasure are much less of a concern. Seeking out markets in other territories where demand for housing is high, on the other hand, is. Therefore, some recently built Mediterranean developments, which remain completely unlet, need to be avoided at all costs, no matter what the potential for capital growth is in years to come.

Of course, some areas of high density population around the Mediterranean will always generate good rental incomes. Sections of the French Riviera, the Catalonian coast of Spain and the shores of Northern Italy all spring to mind. However, it is the mountainous regions of central Europe that many UK investors now eye as the best for potential rental yields. As you might expect, mountainous regions have very limited development opportunities, but they do have growing populations – that demand high-quality housing – to cater for. In Switzerland and Austria, for example, the economies have been outperforming their near neighbours in recent years, but with very little by way of new housing stock. High demand for rental occupation makes Austrian real estate one of the newest trends for investors looking to sink money into overseas economies.

One of the advantages of the smaller nations of central Europe is that their proximity to the Eurozone’s powerhouse economy – Germany – means that the economic downturn, witnessed in southern Europe in recent years, is less likely. Therefore their economies remain stable, growing steadily with much less volatility. Indeed, given the high-tech industries to be found in many of these smaller states, strong capital growth as well as good rental yields can be expected for years to come.

 

 

Written by Julie Hanson

Julie is passionate about property – development, investment and portfolio planning. Along with husband Alec, Julie is actively building a property portfolio while helping others to do the same.

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