Investing in property in overseas markets has become increasingly popular over the past decade, with many buyers receiving excellent returns over relatively short periods of time. The buy-to-let market has developed into an exceptional international sector, increasingly fuelled by the ever growing mass tourism market.
Developing from holiday home ownership into a market of its own, buy-to-let properties have also gained attraction from those previously keen on timeshare, yet without the excessive costs, restrictions, bad reputation and best of all, the ability to own the property outright. Far from being viewed as a second home to upkeep, many buy-to-let properties in various overseas markets have extensive services in place, enabling an income generating investment with little or no maintenance.
Property management companies in place to look after the property, advertise for tenants and even pay necessary bills have made the distance of the buy-to-let property from the owners home location irrelevant. Many developers offer full furnishing packages included in the purchase price, along with guaranteed rental schemes, further assisting investors to never need to lift a finger in order to prepare the property for rental.
The growth of mass tourism and the attraction of holidaying further afield, with accessibility from discounted direct flights have hugely assisted the growth of the buy-to-let market. The growth of tourist markets around the world has also lead to an increase in interest to invest in property in these attractive markets.
To achieve the strongest rental demands from a buy-to-let property, the location is of particular importance. Year round rental potential is not always achievable, so to ensure positive returns on the investment, realistic yield potential should be considered prior to entering into a buy-to-let investment.
The most popular buy-to-let locations catering to the tourist markets are in resort style destinations. Excellent accessibility to international airports, good road connections and properties positions within walking distance of amenities, all assist in the appeal to potential clients. If purchasing a buy-to-let property in a beach resort or ski resort, consider the length of the seasons that attract the clientele. A buy-to-let property in a ski resort featuring a 2 month annual season, will not provide sufficient returns to be considered a viable investment. This is especially true if the property will be owner-occupied during the majority of the high season.
Popular rental options along coastal resort and city centre areas include short term letting during the peak seasons and renting the property on a long-term basis throughout the remainder of the year. Rural property may be considered the ideal getaway for some, yet their rental potential is limited depending upon the extent of isolation and ease of access to near-by amenities.
The exclusivity of the investment location will have an effect on the likeliness of strengthening the rental demand. Purchasing in areas that have been affected by over development for the sole purpose of rental can lead to an abundance of competition on the letting market, with lower overall returns. Regions with growing mass market tourist appeal, coupled with strong build restrictions to avoid future over development, provide ideal locations for buy-to-let investments.
Emerging markets with an economy reliant upon tourism tend to have co-operative government integration towards foreign investments. Often these markets will have tax benefits aimed towards easing associated purchasing costs or returns on the investment.
Stability is an important factor for a safe purchase with long term benefits. A market with a turbulent political history currently undergoing reforms can provide a cheap option for an investment property, yet the continued stability may not be guaranteed.
A government committed to developing the infrastructure necessary for continued growth in the tourist market and focusing on foreign investment, enable not only an attractive investment location, yet also an environment where the growth of job opportunities will benefit the local environment and economy.
The buy-to-let market has developed extensively from the growth of mass tourism around the world. The attraction of self catering accommodation has grown extensively over the past decade to become competitive with hotel accommodation in the majority of mass tourism hotspots. The economic advantages of investing in an emerging market enable a larger selection of the population to access real estate for investment purposes.
Receiving an income from the property, while also benefiting from personal use, provides an attractive option to many buyers. Strong growth of the tourism sector provides continued growth potential and opportunities to investors, along with lower risks and increased stability.
By Nathan Dean