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jeremy fisher

Overseas Propery - Investment Opportunity Analysis

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I've been doing an analysis of various overseas countries' property markets. This analysis includes a scoring system based on a range of important criteria when considering overseas propery investment.

In summary the results look like this (scores are out of 100):

Country Score

1 Slovakia 75.50

2 Germany 61.00

3 Cape Verde 55.00

4 Hungary 53.50

5 Cyprus 56.50

6 Bulgaria 50.00

7 Dubai 49.00

8 Spain 41.50

Only these countries have been analysed at present - more to follow.

The full analysis is attached (it is a pdf of an excel document). Its a very small font but you can use acrobat reader to expand it up to enable it to be read. If you'd like the original excel document just let me have your e-mail address.

I would appreciate everyone's thoughts on:

1) The critieria and weightings I've used.

2) The final results - is Slovakia really so much better an opportunity than the others?

3) Anything I've got wrong in the detailed analysis, or where you are surprised by my scoring.

Or any other comments you might have.

I look forward to everyone's views.

overseas_property_analysis_1.pdf

overseas_property_analysis_1.pdf

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I am an expat based in Munich, Germany and been in Germanz since 1998. I think it will be on of the safest investments bets over the next 10 years. Prices have bottommed, building has reduced significantly, and available building land is increasingly hard to find in the best areas of Berlin, Munich, Hamburg, Frankfurt, Düsseldorf.

The Government just sold some 170,000 flats to foreign investment, so investment pros are now entering the market, inveterest rates are low, and people are now looking at buying. Germany has on of the lowest home ownerships in Europe at approx 40%, with most preferring to rent. So rent yields are 5 to 10%. With immigration from Eastern Europe, population is forecast to grow from 85M to 110M in next 10yrs. From 2020 there will be a population decline due to aging population. But all the signs are healthy. Merkel is new Chancellor (PM) and has stated she wants higher home ownership and libralisation of banking and employment rules. Environment is similiar to UK market in 1970s when Thatcher turned UK into a home owning society, and we know where that lead us. This can only make it easier to buy due to mortage competition, and an improving economy. German economy is forcast to grow around 2%, not a lot but same as UK, and first time for 5 years!

The smart money is already flowing in. I would advice people to move before the crowd to get the best opportunities.

Also for your analysis, cost of buying can be kept to 5%. This is 1.5% ground tax, and aprox 3.5% purchase cost which is for Solicitor etc. If you use a "Makler" or agent they charge 3.49% commission. My advice is buy privately and you can save the 3.49%. Other costs are flights which are cheap with Ryan Air and DBA.

Follow your nose and not the crowd B)

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Thanks, Stephen for your thoughts. It's good to know someone with first hand experience of a market.

How would you say the property markets are different in the different German cities? The Eastern European cities (Berlin, Dresden) seem attractive since you can get more for your money, but maybe there are other factors to consider.

Re costs - its hard for someone for the UK to avoid using an agent, unless you can tell me of an easy way of finding property without one? My research suggests that agents often charge 6-7% commission - perhaps it depends on region or property type.

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How much would a 1bed off plan flat cost me in Berlin?

What sort of rental can one expect?

Cheers.

Probably around £40-70k, but you want to be really careful about buying a single buy to let in Germany since it can be virtually impossible to get long term tenants out of your property. You'll only then be able to sell it on an as investment which will depend on how much you are renting it for. Rents can only be increased by a maximum of 20% every 3 years - so there are limits in rents that can be charged too. Better to buy an already let property as a long term investment - you might be able to sell it in the future should the tenant move out, but don't bank on it!

Rental returns are about 10% - see my original analysis!

Edited by jeremy fisher

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Hi I am living in Dubai. I have to mention that I am also concerned about what I read here...the risk of overupply..However there are other problems one should be concerned as well. Take infrastructure and also delay in finishing the properties.

There were some interesting comments I read on www.azhom.com regarding the above

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Thanks, Stephen for your thoughts. It's good to know someone with first hand experience of a market.

I did masses of research and kept comming back to Germany.

In the final analysis I wanted cheap but I wanted to be able to sleep at night knowing I had the full force of developed nation law behind me.

I found you can buy land in Berlin direct from the state so save all E/As fees! They gave me a very in depth

'pack' with the land (Government department = very 'by the book') which included a survey, contamination investigation etc.

I wne for 10000 sq ft of land. The aim is to sell it on in a few years. I made sure it has dual use so that it will appeal to developers of commercial and or residential markets.

ANOTHER BENEFIT - I found a London lawyer with a German branch - so I felt really safe and secure with them guiding. Pricey mind!

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I did masses of research and kept comming back to Germany.

In the final analysis I wanted cheap but I wanted to be able to sleep at night knowing I had the full force of developed nation law behind me.

I found you can buy land in Berlin direct from the state so save all E/As fees! They gave me a very in depth

'pack' with the land (Government department = very 'by the book') which included a survey, contamination investigation etc.

I wne for 10000 sq ft of land. The aim is to sell it on in a few years. I made sure it has dual use so that it will appeal to developers of commercial and or residential markets.

ANOTHER BENEFIT - I found a London lawyer with a German branch - so I felt really safe and secure with them guiding. Pricey mind!

Dogbox, could I ask why you went for land. It seems to me that land is a much riskier investment than a rental proposition since it depends of property prices increasinig, which given the recent record in Germany is far from certain. Given that the Government obviously have a lot of land available to sell, there must be quite a lot available which might make it hard for you to sell in the future, especially if there is little growth in the property market. It seems to me that the real attraction of investment in Germany is the rental yield which is very good, but of course you won't get this with land.

I can see that it is easier (no property maintenance, tenants etc), and that you avoided agents fees, but in itself this wouldn't seem enough to counteract the lack of yield on the land and the uncertainty of price increases. I'd be interested in hearing more about your thinking in relation to buying land.

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overseas_property_analysis_21_02_06.pdfoverseas_property_analysis_21_02_06.pdfLatest update:

Country Score

1 Slovakia 68.00

2 Lithuania 64.25

3 Latvia 63.25

4 Romania 63.00

5 Germany 61.00

6 Cape Verde 55.00

7 Cyprus 54.50

8 Hungary 52.50

9 Bulgaria 50.00

10 Dubai 49.00

11 Spain 41.50

See latest analysis attached.

This update adds:

Lithuania/Latvia - Fast growing economies and wages, pretty cities, excellent recent capital growth, likely to continue to grow in the short term BUT property prices are now high for Eastern Europe - could they be becoming overvalued.

Romania - Looks like a very good prospect. Good GDP growth. Limited supply. Although little past growth, but is it at the bottom of the cycle, waiting to take off like many other Eastern European states have already. Currently immature mortgage market means must finance in UK so a disadvantage, although once it takes off it will make property much more affordable to the local population. With EU entry soon this is a very good opportunity.

So many people on here are talking about Germany (which I like too), but does anyone have any views on any of the other high potential markets?

overseas_property_analysis_21_02_06.pdf

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Hi I am living in Dubai. I have to mention that I am also concerned about what I read here...the risk of overupply..However there are other problems one should be concerned as well. Take infrastructure and also delay in finishing the properties.

There were some interesting comments I read on www.azhom.com regarding the above

hi hamed, you talking about dubal or germany???

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Hi Brother.

I was talkoing about Dubai...

I have seen Jeremy's report and also saw that Dubai is in the top as well...There it was mentioned that there might be an oversupply risk in this part of the world which might be true. Also there are some problems with the property law which is not ready yet.

For the interested I was suggesting you this site...www.azhom.com... what is great about it is that you can find under the same roof the status of the rents for Dubai, then how it all started when, then some info of about financing the properties..which by the way is very weak at the present.

So can anyone tell me what are Dubai 's perspectives on a medium to long term?

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Hi Brother.

I was talkoing about Dubai...

I have seen Jeremy's report and also saw that Dubai is in the top as well...There it was mentioned that there might be an oversupply risk in this part of the world which might be true. Also there are some problems with the property law which is not ready yet.

For the interested I was suggesting you this site...www.azhom.com... what is great about it is that you can find under the same roof the status of the rents for Dubai, then how it all started when, then some info of about financing the properties..which by the way is very weak at the present.

So can anyone tell me what are Dubai 's perspectives on a medium to long term?

hi hamed, thanks for clearing that up, BFAM

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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