Investors eye rewards where risks are higher

Property investors are putting money into investment destinations with relatively poor property protection.

The finding comes from the 2007 International Property Rights Index published by the Property Rights Alliance. Covering intellectual as well as physical property rights and the legal and political environment, the index is based on opinion surveys within 69 countries.

Norway is the country with the best perceived overall property protection in place, Bangladesh that with the worst.

Norway is also ranked first on physical property rights, with Bangladesh again last. The top five countries for physical property rights are: Norway; Sweden; Netherlands; UK; and Finland. The bottom ranked are: Egypt; Bolivia; Poland; Nicaragua; and Bangladesh.

By region, western Europe gets top ranking for physical property rights, followed by north America, Asia/Oceanis, the Middle East and north Africa, Latin America and the former Soviet Union states, and finally Africa.

In the overall rankings, among popular investment destinations, the USA is ranked 14, France 19, Spain 20, Portugal 22, Italy 27, Turkey 38, Morocco 42, and Bulgaria 51.

Publication of the index coincides with the finding of the latest HIFX Global Property Hot Spots Report, which concluded that investors are being tempted by higher risk hotspots, including Germany and Romania.

Despite a decade long economic downturn in Germany, following the country’s successful hosting of the World Cup, in which Berlin as the final venue played an integral role, the city is now proving very popular with British property speculators, said the firm. Areas that are on the investors’ current hit list include the prime central district of Schonëberg, the old money area of Charlottenburg, and Friedrichshain, a traditionally working class area of former East Berlin that is rapidly gaining in status as a hip and trendy district.

‘The property market in certain areas like the capital Bucharest has been growing at the bullish rate of an estimated 25 per cent per annum for three years now, fuelled by speculators waiting for healthy capital returns once the country becomes a free market and receives an estimated 11bn euro in EU funding’, said the currency specialists’ marketing director Mark Bodega.

'Less experienced buyers need to be aware that this is still a speculator driven market. Until the county amends its property-buying laws, foreign nationals cannot hold freehold properties. It’s also not yet possible to purchase there with a UK or Romanian mortgage and so most buyers are cash buyers targeting apartments in Bucharest – which start at around £50,000 – or the budding ski resorts such as Brasov’.

Again it is the more adventurous investors that seem to be driving demand in the Polish capital Warsaw, along with Krakow, the country’s second largest city and its cultural heartbeat. Home to Poland’s oldest university, the Jagiellonian, nearly 200,000 students study in the city. This makes for great reading for buy to let landlords, many of whom have also been drawn to the city by the opening of routes in by no frills airlines, said HIFX.

• Last year 50 per cent more UK investors bought property in Egypt than the previous year, Egypt Revealed has reported. ‘The Red Sea region is not only a tourist hot spot but is fast becoming a property mecca’, said the firm’s managing director Tahir Ali. ‘Prestigious Dubai developers have identified the area’s potential and are developing high quality real estate along with first class amenities. British buyers are attracted here due to the steady year on year capital appreciation of between 20 per cent and 30 per cent, average rental returns of 12 per cent, no capital gains tax and the streamlined purchasing procedure’.

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