BUYING ABROAD:CUBA, SWITZERLAND and Montenegro are three of five property hotspots to watch out for in 2009, according to a review of foreign property markets just published by Savills.
Switzerland, seen as a safe haven both politically and financially, is benefiting from the “flight to quality” according to Charles Weston-Baker, director of Savills’ international residential department. “This is reflected in the success of its lakeside and ski properties.”
Cuba – where Savills is selling units in a resort called the Carbonera Club – is “set for an economic and cultural boom” after years of isolation. And Montenegro is a “young and developing market with areas of outstanding beauty”. Its other two hotspots are Brazil and Mauritius, both of which have growing tourist industries.
Savills says that prices in most property markets will continue to fall in 2009, with a return to growth in 2010.
Both Savills and Knight Frank, two leading UK-based international estate agents, are being determinedly upbeat about recovery, which they say will be led by what they call HNWIs (high net worth individuals), defined by Savills as people with $1 million/€795,000 in net assets, not including their primary home. And there are now 1,125 individuals worth at least $1 billion, nearly half of them in the US.
Nicholas Barnes, partner in residential research at Knight Frank, says “there are flickers of distant light, certainly at the high end of the market. There are buyers who could move, but who are waiting to see if prices will fall by another x per cent.”
When these buyers reckon the market is near the bottom, they’ll buy into places they’ve been waiting to get into, says Barnes: these will include the very top markets, like the Côte d’Azur, Tuscany and the Alps in Europe, or Barbados in the Caribbean. Many HNWIs “see the downturn as a short-term opportunity for investment, not a permanent negative”, says Weston-Baker. The agencies also believe that mid-market buyers, particularly baby boomers, will also stay in the market for second homes overseas: Savills researcher Rebecca Gill says that their surveys show that “there are vast numbers of over-50s and over-60s wanting homes overseas, often in traditional areas”.
Irish and British buyers favour places like France, Portugal and even Spain, a market which has suffered from overdevelopment and price collapse. But as Knight Frank’s Barnes says “the reasons it’s popular remain – there’s an established expat community there, and sun”.
There is likely to be continued interest in high-end properties in prime locations, notably parts of Mallorca, Ibiza and the Balearics as well as in Marbella and Sotogrande, according to Savills. There is also going to be continued interest in resort developments in countries from Thailand to Mauritius to the Caribbean to Brazil, the agencies believe.
But won’t buyers be nervous of buying, not knowing if a developer will be able to complete?
Savills and Knight Frank both advise buyers to look at the developers’ track record, at whether part of the scheme has already been successfully completed and how financially sound the development company is: those offering deep discounts and relying heavily on sales “are hurting”, says Barnes. “The developers least affected are companies with low debt who can sit tight and wait the downturn out.”
Both Barnes and Weston-Baker make the point that there is more information than ever available to potential buyers via the internet, and advise them to do plenty of research if thinking of buying abroad.
