City workers looking to spend their bonuses on property have been left out in the cold, as the supply of property in their traditional investment areas including the City and Docklands has now reached rock bottom, reports the Homebuyer Show...

An estimated £4 billion worth of city bonuses is set to be spent on property following the huge bonus payouts in December, as city workers look to maximize their funds through property investment.

With recent research now indicating that the supply level in their traditional investment areas is now at an all time low, many potential investors are now having to look elsewhere.  The majority of estate agents in the City and Docklands areas had fewer than ten properties for sale at any one time at the end of 2006 compared with 15-20 at the start of the year.

The main countries which are likely to attract these cash-rich investors are France, Spain, Bulgaria and the United States.  However, for those investors who are a little more adventurous countries like Barbados, Dubai and Brazil are also offering good returns.

Nick Clark, managing director of Homebuyer Events, commented: “These wealthy investors will be attracted to places like Dubai where they will be able to avoid paying tax on their purchases. We will also see considerable investment taking place in Europe, both in traditional countries like France and Spain as well as the emerging markets of Poland, Bulgaria and Hungry.”

Emerging European markets attracting investment

One company which has already seen movement from these bonus investors is VEF French Property, which handles properties in France and in Poland through its investment company Validus.

Trisha Mason, managing director of VEF French Property, said:  “Many of the lucky people who received large city bonuses at the end of last year seem to be deciding to use them to invest in property. What we are seeing is that very few are looking to buy full time homes in France, but many have been talking with us and buying investment properties in France and in Poland. It seems that the canny recipients of large bonuses intend their money to keep working for them as hard as they are working for their money.”

The emerging European market is also attracting investors, especially in Bulgaria and Hungry, where many British investors have already taken the plunge and received good returns on their investment.

David Smith, sales director of Bulgarian Dreams commented: “Bulgaria has traditionally been seen as the place to buy bargain properties with studio apartments starting from £20,000. But over the past few months we have seen an increasing number of people, especially from the London area, wanting to buy larger more luxurious properties of two and three bedroom apartments and putting down 50% or more of the property price as a deposit. The inclusion of Bulgaria in the EU has also helped to make the country a more credible investment market and is likely to help grow rental yields.”

And for the more adventurous investor...

Investors are also said to be considering more tropical locations like the Caribbean and Island of Margarita, where starting prices are around £30,000. 

Kevin Parson, managing director of Parson International said: “The United States is also currently providing great opportunities for investors. The real estate market is very much a buyers market at present with property prices start at around £130,000 for a three bedroom detached pool home. The current strength of the pound compared to the dollar makes these properties even more attractive to British investors.”

The Middle Eastern market especially Dubai is proving to be equally attractive to city investors, who are able to benefit from the tax free earnings and high rental yields of 8-10%. Property can be brought from as little as £30,000 for a studio to £2million for an exclusive villa.

Kamran Mahmood, founder and CEO of MiNC Property Enterprises, said: “The variety and high quality of property available to investors is huge, and the fact that the Dubai Government has enabled 100% foreign ownership of property means that Dubai has quickly been established as the ‘in’ place for property investment.

Mahmood continued: “The added bonus of tax free earnings (subject to tax advice), strong GDP growth -16% in 2005 and political stability have all helped to make Dubai a great place to invest in property and is attracting city professionals."

But UK market still offers good returns

Closer to home the UK property market continues to offer investors good returns, student apartments in particular are still proving to be a good investment with many offering returns of 6-8%.

“These types of properties tend to spring up here and there and may take some finding, but are worth looking at if you find one. Places like Lincoln, where new universities have been built often offer the most opportunities,” commented Mr Parsons.

Mr Clark, continued: “This is a great time for property investment whether in the UK or overseas and the Homebuyer Show in March provides an ideal chance for investors to see a host of exhibitors with property opportunities around the globe.”
 
The Homebuyer Show, incorporating The Property Investor show, will be held over Friday 2 March (10am to 6pm), Saturday 3 March (10am to 5pm) and Sunday 4 March (10am to 4pm) at the ExCeL Centre in London’s Docklands, easily reachable by car or public transport. Entry to the Show will be free but with an additional admission charge for seminars and debates.

For further information on the Show including advance booking for tickets and seminars, visit www.homebuyer.co.uk.